Business

Millions of Taxpayer Dollars Used to Defend Freddie and Fannie Execs on Trial for Fraud

Remember when Fannie Mae and Freddie Mac were taken over in September, 2008? Bet you didn’t think taxpayers would be stuck paying $50 million to defend three executives accused of fraud, did you?

Yep, you read that right.

Millions of Taxpayer Dollars Used to Defend Freddie and Fannie Execs on Trial for FraudFranklin Raines, Fannie Mae’s former chief, and J. Timothy Howard, former financial officer, shown testifying in 2004 (Photo Source AP)

Franklin Raines, J. Timothy Howard, and Leanne Spencer, are accused of accounting fraud designed to maximize their own bonuses and taxpayers have been paying for their legal defense, according to Kevin Spak of Newser.

But how did taxpayers get stuck with the bill?

“The legal costs are the responsibility of taxpayers because of contracts struck by the companies before they collapsed,” writes the New York Times’ Gretchen Moregenson.

What’s worse is the fact that all this could have been avoided had the Federal Housing Finance Agency chosen to repudiate the contracts when it “rescued” the companies. But for reasons unknown, it didn’t and taxpayers have been bearing the cost ever since.

“Those agreements, which are typical in corporate America, state that legal fees incurred by executives defending against lawsuits will be advanced by the companies,” Moregenson writes. “If a court or jury rules that officials breached their duties or acted in bad faith, the officials will have to repay the advances.”

So at least taxpayers might get paid back. How much was advanced since the companies were “rescued?” $50 million?

“But with legal outlays since 2004 reaching $99.4 million [for the three executives]…it seems unlikely that the taxpayers will ever recover the money even if some or all of them are found liable,” the Times reports. Simply put, even if the jury finds some or all of them liable, it’s going to be interesting to

Well, if it’s any consolation, at least a couple of people in Washington, D.C., think this is unacceptable.

“The inspector general’s report on legal fees clearly demonstrates the need for continued Congressional oversight over these entities,” said Rep. Randy Neugebauer (R-TX), chairman of the House Financial Services subcommittee on Oversight and Investigations.

“I strongly agree with the inspector general’s findings that at the end of the day, much more needs to be done to ensure that the enterprises and the F.H.F.A. are accountable to the taxpayer and that a strategic plan is implemented to control costs,” he added.

But, you know, considering taxpayers have already lost about $183 billion to these mortgage companies, what’s another $100 million?

(H/T: Newser)

Comments (62)

1 2
  • judkast
    Posted on February 23, 2012 at 3:50pm

    These despicable characters should be given a noose / rope to either hang themselves or have someone else hang them. They do not care for anyone except for their own narcissistic selves and would continue to do this type of “stealing” if they weren’t caught. They will not serve a day in jail and if they do, will be out in no time, buying off whoever they need to with monies that are not theirs to begin with.

    Report Post »  
  • judkast
    Posted on February 23, 2012 at 3:46pm

    These Executives that scammed millions of dollars – should be given a noose to hang themselves or better yet to have others hang them, rather than monies for their defense. These despicable characters don’t care for anyone else except themselves…

    Report Post »  
  • Cat
    Posted on February 23, 2012 at 3:28pm

    …
    Good American friend of mine worked in Brazil for fifteen years and told me this story

    One day he was eating lunch in a ritzy hotel with one of his Brazilian associates
    The view from the table overlooked a park
    He said, as they were eating, some men were marched to a wall and shot by police in broad daylight
    His Brazilian associate said, “Those bank robberies will end now, even though half those poor souls probably had nothing to do with the robberies.”

    Just something to ponder

    Report Post » Cat  
  • Mrs. Bowers
    Posted on February 23, 2012 at 3:13pm

    The gift that keeps giving.

    Report Post »  
  • Michigan Vacation
    Posted on February 23, 2012 at 2:38pm

    And the MSN wonders why the TEA PARTY is massively PO’ed.

    Please forward this article to your friends – we need more and more VOTERS to see what the federal goberment is doing to us.

    Report Post »  
  • midwesthippie
    Posted on February 23, 2012 at 2:18pm

    …derrrrr…the game is rigged. now what?

    Report Post » midwesthippie  
    • HKS
      Posted on February 23, 2012 at 2:30pm

      All of this just to try and cut the tail off the snake? Tails are a dime a dozen, go after the head.

      Report Post » HKS  
  • Soquel by the Creek
    Posted on February 23, 2012 at 2:11pm

    Believe me, you and I are paying for FAR more than just criminal defense of these executives. My question: When will charges be filed against those in Congress that BLOCKED prudent reform?

    “Fannie, Freddie, and You as the Secret Santa”
    http://soquelbythecreek.blogspot.com/2010/02/fannie-freddie-and-you-as-secret-santa.html

    Report Post » Soquel by the Creek  
    • smithclar3nc3
      Posted on February 23, 2012 at 4:00pm

      Exactly, Dodd, Frank, Pelosi, and the whole Hee Haw gang should swing from the gallows

      Report Post »  
  • F_This
    Posted on February 23, 2012 at 2:10pm

    “this could have been avoided had the Federal Housing Finance Agency chosen to repudiate the contract when it “rescued” the companies”
    Us taxpayers should sue the FHFA for not doing their job and costing is 100 mil.

    Report Post »  
    • PapaJohannesPatriot
      Posted on February 23, 2012 at 3:51pm

      The FHFA would probably just use our tax money to defend itself.

      Report Post »  
    • smithclar3nc3
      Posted on February 23, 2012 at 4:04pm

      answer easy quit paying taxes all business and individuals should turn off the tap. And replace every single person in Washington from the lowest to the highest.

      Report Post »  
  • SpankDaMonkey
    Posted on February 23, 2012 at 2:09pm

    .
    And just think Obama will be re-elected by the free lunch crowd in November………

    Report Post » SpankDaMonkey  
  • WithoutGuile
    Posted on February 23, 2012 at 1:51pm

    I don’t want to sound like a lefty here…but wouldn’t rope be a cheaper way to deal with these robbers.

    Report Post » WithoutGuile  
    • Mil Mom
      Posted on February 23, 2012 at 8:11pm

      @WithoutGuile
      Posted on February 23, 2012 at 1:51pm
      I don’t want to sound like a lefty here…but wouldn’t rope be a cheaper way to deal with these robbers
      ***
      WE ALL NEED TO FIND A WAY TO COME TO BILL BACHELDER(sp)’s DEFENSE IN OHIO! HE TOLD THE TRUTH IN HIS “20 yrs to life” COMMENT AND IS BEING PILLORIED BECAUSE OF THE “OFFICE” bo REPRESENTS, BUT THE SAME IDIOTS CALLED IT “FREE SPEECH” WHEN COLLEGE DRAMA PROFESSORS ASSIGNED STUDENTS TO WRITE PLAYS ABOUT THE WAY BUSH WOULD BE ASSASSINATED!

      Report Post » Mil Mom  
  • Vechorik
    Posted on February 23, 2012 at 1:45pm

    Finance: Bloomberg “Paul Is Only GOP Contender Whose Policies Would Pare Debt, Analysis Finds”

    http://www.bloomberg.com/news/2012-02-23/paul-s-plan-would-lower-debt-while-rivals-wouldn-t-report-says.html

    Report Post »  
  • red_white_blue2
    Posted on February 23, 2012 at 1:18pm

    The world is upside down~!!!

    Report Post » red_white_blue2  
    • TLS
      Posted on February 23, 2012 at 7:44pm

      You are so right the world is upside down. We need some leadership quick.

      Report Post »  
  • FEDUPWITHGOV2
    Posted on February 23, 2012 at 1:16pm

    HATCHETJOB
    I agree

    http://www.youtube.com/watch?v=9zYh0RsCXys

    Report Post »  
  • Ghandi was a Republican
    Posted on February 23, 2012 at 1:14pm

    Raines is a criminal and an extortionist. If this were the private sector he would be in jail, exactly where he should be. Obama/pelosi/reid/franks/dodd/waters ALL accessories. Issa has work to do and we need to give him the Congressional majority to do it, or we are guilty of aiding and abetting!

    Report Post » Ghandi was a Republican  
  • Gonzo
    Posted on February 23, 2012 at 1:06pm

    What’s another $50 million here or there? Throw it around…we’ll print more.

    Report Post » Gonzo  
  • Razorhunters
    Posted on February 23, 2012 at 1:03pm

    have not paid taxes since 9/11 …

    i know free-fall and demolitions when i see them.

    ” do you believe 19 people in a cave were able to do this…do you believe 19 people in a cave were able to have norad stand down…hi-jacked planes were in the air for over an hour….”

    Report Post » Razorhunters  
    • smithclar3nc3
      Posted on February 23, 2012 at 1:16pm

      You and 50% of the population…..

      Report Post »  
    • Razorhunters
      Posted on February 23, 2012 at 1:27pm

      feel free to continue to fund the criminal govt…

      i stand by my choice.

      Report Post » Razorhunters  
    • Razorhunters
      Posted on February 23, 2012 at 1:31pm

      i have given blood , flesh and 30+ yrs of payment…

      so take your pompous bs and go away.

      Report Post » Razorhunters  
  • blanco5
    Posted on February 23, 2012 at 12:55pm

    Does anyone think we are going to have an election in November? Do you really think they are going to give up their power?

    Report Post »  
    • Razorhunters
      Posted on February 23, 2012 at 1:04pm

      will be some event …

      Report Post » Razorhunters  
    • hauschild
      Posted on February 23, 2012 at 1:19pm

      @blanco5

      There’s no way Obama loses. There’s too much bottom feeding for our side to overcome. If this were 1980 when most on the left weren’t so bottom feeding (or, we had a republican candidate that was worth a damn), then I’d say Obama would be beaten soundly, because even those left-leaning knew Carter (like Obama) was a complete loser that was in way over his head and it’s better to cut the losses early and admit a huge mistake was made.

      However, don’t underestimate the vast numbers of dirt bags in this country, whose numbers are growing exponentially with each passing year. Their numbers are nearing 50% and they‘re motivated entirely by receiving things at their fellow citizens’ expense. It’s almost impossible to combat this type of mentality.

      Report Post »  
    • Razorhunters
      Posted on February 23, 2012 at 3:18pm

      do not forget the voter fraud…happened in several states in last few months

      Report Post » Razorhunters  
  • abbygirl1994
    Posted on February 23, 2012 at 12:50pm

    This whole administration needs to be admitted to Sing Sing! So we bailout Fannie and Freddie with taxpayer dollars, then they make taxpayers pay their attorney fees?? I smell a rat.. a stinking rotten filthy RAT! Lord help us!

    Report Post » abbygirl1994  
  • Infidel49
    Posted on February 23, 2012 at 12:36pm

    Ok, but when found guilty they had better pay restitutions. Also make sure it doesn‘t end up in obama’s campaign fund.

    Report Post » Infidel49  
    • oldoldtimer
      Posted on February 23, 2012 at 1:10pm

      TRhey will not be found guilty as long as this DOJ has any thing to do with it.

      Report Post »  
  • hatchetjob
    Posted on February 23, 2012 at 12:35pm

    This whole government needs to be gutted.

    Report Post » hatchetjob  
  • jakartaman
    Posted on February 23, 2012 at 12:21pm

    Boy I just can’t wait to write out my 2011 tax check to the IRS.

    We had a tax revolt 236 years ago – looking like we are due for another!!!

    Report Post »  
    • hauschild
      Posted on February 23, 2012 at 1:26pm

      The first thing I’d do as POTUS would be an executive order mandating employers no longer withhold taxes from employees pay, unless employees requested it. Employees would have to “opt in”, so the default would always be that the employee is responsible for payment.

      Imagine if taxes for individuals were like businesses where you pay them monthly or quarterly: People would suddenly wake up and say, “I‘m paying this every freakin’ month??? For what, to support a bunch of losers and slugs and crony capitalists???”

      Not to mention, it would then allow for a true tax revolt to occur. It’s impossible to do now with the way the commies have rigged the game.

      Report Post »  
    • jakartaman
      Posted on February 23, 2012 at 1:34pm

      You would be absolutely right.
      The IRS is sacred to death that we the People don’t figure out that taxation on wages is unconstitutional
      If enough Americans refused to pay what do you think would happen – even the Fema camps could not hold us all!!

      Report Post »  
  • airportengineer
    Posted on February 23, 2012 at 12:19pm

    They should carry Professional Liability Insurance to cover Legal Expenses! Why isn’t insurance coverage in place to pay for that, instead of taxpayer money?!?!?!

    Report Post » airportengineer  
    • CatB
      Posted on February 23, 2012 at 12:31pm

      Why don’t they use what they stole (were paid)? .. you can’t tell me they have nothing left! They just knew where to hid it .. anyone else would be in prison just for that!

      Report Post »  
  • UBETHECHANGE
    Posted on February 23, 2012 at 12:18pm

    Aaaaaaaaaarrrrrrrrrggggggghhhhhhhh! ABO 2012!

    Report Post »  
  • SBR308
    Posted on February 23, 2012 at 12:16pm

    We are just fools to put up with this corrupt goverment!!

    Report Post »  
    • oldguy49
      Posted on February 23, 2012 at 12:25pm

      yep……….they give loans to people that can not aford to pay………..then they give them more money and cut the price of the house to keep them in it…….now they are going to give them money if they were forclosed on….then they strip the homes and move on basicly destroying the home………now we spend millions to defend crooks that stole from us…………..boy, i must have been brought up wrong

      Report Post »  
  • Snowleopard {gallery of cat folks}
    Posted on February 23, 2012 at 12:15pm

    No suprise anymore given this corruption under Obama.

    Report Post » Snowleopard {gallery of cat folks}  
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