Glee and Jubilation: Feds Trying Harder
FBI Goes After Mortgage Fraud
Yesterday, testimony revealed that the FBI has increased the number of investigations for mortgage fraud to a total of 24. In testifying before the House of Representatives Judiciary Committee, Bureau Director Robert Mueller testified that, “Just like the (savings and loan) crisis in the early 1990s and the corporate excesses of the beginning of this decade, the FBI will pursue these cases as far up the corporate chain as necessary to ensure that those responsible receive the justice they deserve.”
The FBI is not publishing the list of companies under investigation, which would only fuel the fire and panic going on in mortgage circles these days. With Lehman Brothers in crash-and-burn mode, Fannie and Freddie under the government’s thumb, and rumors of other financial institutions struggling, the list could, literally, break the bank and send the nation into a further financial crisis.
Feds Deny Fannie and Freddie Execs
Imagine running a company into the ground and expecting an large multi-million exit package. Only those at Fannie Mae and Freddie Mac would. Fannie CEO Daniel Mudd was expecting $8.4mil (after a salary of $12.2mil in 2007), while Freddie CEO Richard Syron hoped to walk away with $15.5mil (who earned $19.8 mil in 2007). But the Federal Housing Finance Agency has denied them. We wouldn’t want it any other way, right?
Line in the Sand
It looks like the government bailouts are coming to an end. Public outcry seems to have reached the powers that be after the Fannie and Freddie takeover. Lehman Brothers is up a creek without a paddle, and no lifesaver is being thrown. Execs are frantically trying to sell of portions of the company (Barclays just stepped in to snap up part of the distressed company). AIG got a bit of a break, with a government loan, but it appears that the feds tried to structure the deal in such a way that both the economy and the government coffers benefit, by charging a high interest rate (11.5%), taking an almost 80% stake in the company, and having veto control over what assets are sold and at what price.
