Friday, December 16, 2011

S.E.C. Charges Fannie and Freddie with Fraud

Finally, the S.E.C. is charging top Fannie and Freddie executives with fraud.  It seems pretty straightforward to me.  In 2007 Fannie told investigators that it had just 0.2 % of its portfolio in subprime loans, but it actually had 11% at the time.  Freddie told investigators in 2006 it had only $2 - $6 billion, but the S.E.C. says it was more like $141 billion, or 10% of its portfolio.

These lies were a big part of the story that led to the financial meltdown, and of course, the government had to seize control of them later to keep them from collapsing.  

I would like to see prosecutions and real consequences for these people as well as for the executives of the giant, too big to fail financial institutions.  Mainstreet has certainly paid the price for their mistakes in taking out loans they couldn't afford.  Many more in mainstreet paid even bigger prices in unemployment, lower wages, lost opportunities and the other punishments of the Great Recession.  It is time for the super powerful and politically connected in Wall Street and government to be held accountable for their creating this entire mess in the first place.