Originally published by Kevin.
Ask Daniel Mudd.
It was a mere decade ago when, as the head of Fannie Mae, he wanted Aunt Fannie to be provided with more authority to make residential acquisition, development, and construction loans because Fannie Mae hadn’t already heated the housing market to the boiling point with its loose lending policies for permanent residential mortgage loans, and Mudd wanted to achieve Warp Factor 4 ASAP! As we noted at the time, the market was being adequately serviced and there was no need for Aunt Fannie’s gentle ministrations, and “[u]ntil the 800-pound gorilla proves that there’s room (and a need) for it at the table, I’d say let’s not let it eat.” We were also suspicious that a “slowdown” was on the horizon. If we’d guessed “crash and burn,” we would have hit the nail on the head, of course, but hindsight is always 20/20.
Six months later, Mudd, along with ousted Fannie Mae executives, was caught up in an influence-peddling scandal involving contributions by Fannie Mae officials to a certain US Senator who, in turn, allegedly ran interference with an investigation of Fannie Mae by the Inspector General of its overlord. That little kerfuffle did nothing to wipe the mud from Mudd’s reputation.
The crowning blow came in 2011, when the SEC sued Mudd and other former Fannie Mae (and Freddie Mac) executives for securities fraud. As the SEC alleged in its press lease:
Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, Director of the SEC’s Enforcement Division. “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. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.
While the other defendants settled more quickly, Mudd hung on.However, recently, he announced that he finally settled: for a paltry $100,000. It’s also not clear whether that payment will be his personal responsibility or will be covered by a D&O carrier. Not that any of the defendants had their heads handed to them. According to Housing Wire’s Brena Swanson, none of the defendants paid more than $250,000. The Reuters article to which Swanson links states that the two lower-ranking Fannie Mae officers sued along with Mudd settled for $25,000 and $10,000. A hundred and thirty-five thousand dollars to settle all claims against former Freddie Mac officers in what is described as one of the SEC’s “biggest cases to arise from the financial crisis and mortgage meltdown.” And none of the settling defendants admitted wrongdoing. Yeah, that’ll show ’em!
You have to ask the obvious question: if you’re going to settle for such a paltry amount, why did you bring the suit in the first place?
Perhaps what Marc Cuban said two years ago, following his butt-whooping of the SEC, is correct. “I stood on the court steps and said the SEC is a joke. I thought that then, and I think that now.”
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
from Texas Bar Today http://ift.tt/2dhKk9q
via Abogado Aly Website
No comments:
Post a Comment