SEC takes the first step: it filed lawsuits against former Fannie and Freddie CEOs

The US Securities and Exchange Commission has taken its first big step: it filed lawsuits against former CEOs of the two government-sponsored enterprises. Daniel Mudd, the ex-CEO of Fannie Mae and Richard Syron, the former CEO of Freddie Mac faced lawsuits today in Manhattan federal court.

However, the lawsuits were followed by a statement that the SEC has entered into non-prosecution agreements with the GSEs.

According to lawsuit documents made public, Syron and Mudd, along with other executives understated exposure to subprime mortgage loans saying the exposure of the companies they led was between $2 billion and $6 billion, while they knew the real number was $244 billion. This was happening between 2007 and 2008.

The regulator stated, that Fannie Mae executives said the company’s exposure was ten times smaller than it really was. This led to this lawsuit that names six ex-executives at the GSEs. What we must not forget is the critics SEC was facing recently, so its action is far from being so accurate than Iceland’s.

With no prosecution on the horizon, SEC’s action sounds like an illusion created by regulators, maybe because Christmas is near so we, the taxpayer, who always pay for the banksters’ wicked game, might think that everything will be fine.

However, Fannie Mae said today, that “under the agreement, without admitting or denying liability, it has offered to accept responsibility for its conduct and to not dispute, contest of contradict a set of factual statements regarding the diclosures,” Bloomberg cited in its article discussion SEC’s action.

The lawsuit is seeking to fine these former CEOs, but again, we are returning to money, and SEC often forgets that these men ruined the life of many, and money can’t compensate the American Dream they lost into foreclosure.

An interesting reply – commenting the recently filed lawsuit against him – came from Mudd  – now the CEO of Fortress Investment Group LLC –, who said that regulators were aware of everything what was going on at Fannie Mae. So my question is: why their lack of action at the time? Why now? Because SEC is pushed from behind by the Obama administration  – indirectly, of course – because elections are coming and the war of words and action has begun.