The government takeover of Fannie Mae and Freddie Mac is bound to keep a lot of lawyers very busy this weekend.
Late Friday afternoon in Washington, federal officials met with top executives from both mortgage giants to go over a plan that would place them under government control.
Naturally, the lawyers were in tow, The Washington Post reports. According to the Post: "The chief executives of the two companies were called into afternoon meetings yesterday at the 17th Street NW offices of the Federal Housing Finance Agency, their direct regulator, sources familiar with the events said."
The Post continued: "Executives of the two companies were told to show up without being told of an agenda. Daniel H. Mudd, chief executive of Fannie Mae, was accompanied by lawyers from Sullivan & Cromwell, the company's outside counsel. He arrived at 3 p.m. for a two-hour meeting. Richard F. Syron, chief executive of Freddie Mac, began his meeting at around 5 p.m., accompanied by several members of the Freddie Mac board and lawyers from the firm Covington & Burling."
As Legal Times reported back in July—when the Department of Treasury formulated a plan that gave the mortgage giants access to government funds—Fannie and Freddie relied heavily on their in-house teams and picked up the phone to pull in partners from Covington; Cadwalader, Wickersham & Taft; Cahill Gordon & Reindel; and Cravath, Swaine & Moore.
This time around, The New York Times is reporting that H. Rodgin Cohen, chairman of Sullivan & Cromwell, is also at the table for Fannie.
In July, Covington’s David Martin, co-head of the firm’s corporate and securities practices, confirmed that he is advising Freddie—though he was coy about the firm’s specific role. “We’re outside counsel, and we’re working with them,” he said at the time.
Martin led a legal team that helped Freddie deal with fallout from a 2004 accounting scandal. Freddie was also relying on Charles Bryan, head of Cadwalader’s D.C.-based capital markets practice. Cadwalader has served as outside counsel to Freddie Mac since the 1970s, principally on the company’s securities offerings.
It’s also a safe bet that Robert Bostrom, Freddie Mac’s general counsel, and Beth Wilkinson, Fannie Mae's general counsel, are deeply involved. It wasn’t clear as of late Friday evening, however, if they would be affected should the government dismiss top executives.
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