Fannie Mae-No Politics (FNMA)

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Does anybody know how this old news plays into the current lawsuits? It was before I started buying FnF but is it srill relevant?

SEC Charges Former Fannie Mae, Freddie Mac Executives with Fraud
By Elizabeth Murphy | December 16, 2011 11:18 am
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The Securities and Exchange Commission charged six former top executives from Fannie Mae and Freddie Mac today have been charged today with securities fraud.

The six former executives knowingly underreported the companies’ loan holdings and fooled investors by giving them “false comfort,” according to an SEC news release.

The three former Fannie Mae Executives charged in the SEC complaint include:

Daniel H. Mudd, former chief executive officer
Enrico Dallavecchia, former chief risk officer
Thomas A. Lund, former executive vice president for the company’s single family mortgage business

The three former Freddie Mac executives charged in a separate SEC complaint include:

Richard F. Syron, former CEO and chairman of the board
Patricia L. Cook, former executive vice president and chief business officer
Donald J. Bisenius, former executive vice president for the single family guarantee business

“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” Robert Khuzami, Director of the SEC’s Enforcement Division, said in the release. “These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and misled the market about the amount of risk on the company’s books.”

The suit against former Fannie Mae executives Dallavecchia, Lund and Mudd alleges that when the company began disclosing its exposure to subprime loans in 2007, it reported less than one-tenth of the loans that met the description it provided. The suit also alleges that the executives knew and approved of the decision to underreport its Alt-A loan holdings, disclosing in 2007 that it was 11 percent of its single family loans portfolio when it was actually almost 18 percent.

The suit against former Freddie Mac executives alleges that they falsely led investors to believe the firm used a wide definition of subprime loans. According to the complaint, Syron and Cook publicly said the business had “basically no subprime exposure,” but in reality it was exposed to about $141 billion of loans internally. This accounted for about 10 percent of the loan portfolio in 2006, and grew to almost $244 billion, making it 14 percent of the portfolio, in 2008, according to the suit.

Both Fannie Mae and Freddie Mac have signed non-prosecution agreements with the commission as litigation moves forward, according to the release.

http://www.mainjustice.com/2011/12/16/sec-charges-former-fannie-mae-freddie-mac-executives-with-fraud/