Taxpayers Have Paid Millions to Defend Fannie Execs

FHFA has spent $37M on accused fraudsters since takeover
By Kevin Spak,  Newser Staff
Posted Feb 22, 2012 11:28 AM CST
Taxpayers Have Paid Millions to Defend Fannie Execs
The Fannie Mae headquarters is seen in Washington, Monday, Aug. 8, 2011.   (AP Photo/Manuel Balce Ceneta)

The US government has sunk almost $100 million into defending a trio of ex-Fannie Mae executives accused of securities fraud, including $37 million since the government took control of the firm, according to a regulatory analysis released today. The Federal Housing Finance Agency is on the hook for those costs because of contracts signed before the federal takeover, the New York Times explains—though the inspector general's report notes that the government could have repudiated those contracts during the takeover, but didn't.

The three executives, Franklin Raines, J. Timothy Howard, and Leanne Spencer, are accused of an accounting fraud designed to maximize their own bonuses. If a jury ruled that they breached their duties with the company they'd have to repay the advances, but the costs have grown so large that taxpayers are unlikely to recoup their money even then. The inspector general acknowledged that the FHFA has few options, but called for greater oversight in the case. (More Fannie Mae stories.)

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