The boards of Fannie Mae and Freddie Mac have some protection from lawsuits, thanks to Congress.
The Housing and Economic Recovery Act of 2008 includes a provision that says, “The members of the board of directors of a regulated entity shall not be liable to the shareholders or creditors of the regulated entity for acquiescing in or consenting in good faith to the appointment of the Agency as conservator or receiver for that regulated entity.”
When told of the provision, Richard Ferlauto, the director of corporate governance and investment for the American Federation of State, County and Municipal Employees, said, “There is activity going into holding those people responsible for not appropriately providing guidance.” He added he expects pension funds and investors will find a way to take legal action.
Earlier today, Ferlauto said he believes large pension funds heavily invested in the two companies will sue.
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