The chairman of the House Committee on Oversight and Government Reform wants to know why lending giants Fannie Mae and Freddie Mac are still paying the legal bills for their former executives.
Those bills have run well into the millions of dollars — $24.2 million to defend the former executives and $160 million overall to defend them and the companies in various lawsuits, The New York Times reported this month. In September 2009, The American Lawyer outlined some of the firms that were getting the work at that time, including Jenner & Block, Latham & Watkins, Mayer Brown, O'Melveny & Myers, Williams & Connolly and Zuckerman Spaeder.
Taxpayers are effectively on the hook for the legal fees, because the federal government took over the two mortgage companies in 2008.
Rep. Darrell Issa (R-Calif.), the oversight chairman, today released a letter he has sent to the federal agency that oversees the two companies. The letter asks for a “full and complete explanation” of the decision to “continue advancing legal fees on behalf of former executives.”
The seven-page letter (PDF) also asks for employment contracts for former executives Franklin Raines, Timothy Howard, Leanne Spencer and Leland Brendsel, and for communications involving the companies, the Treasury Department and the White House. Issa wants the information by 5 p.m. Friday.
Other lawmakers, including Rep. Randy Neugebauer (R-Texas) and then-Rep. Alan Grayson (D-Fla.), have also taken an interest in the legal fees.
A spokeswoman for the agency, the Federal Housing Finance Agency, said it has received the letter and would respond soon.
Updated at 4:28 p.m.
The legal bills are paid for these executives for the same reason Dodd-Frank legislatively paid Wall Street bonuses in 2009 with taxpayer money.
The financial crisis was avoidable, or put another way, deliberate and intentional. Fundamental change, creating a global financial crisis, came with a price tag.
How else could the Financial Stability Oversight Counsel (F-SOC) come into existence if not for the hard work and years of effort that went into perfecting the man created disaster?
Posted by: Joe Jefferis | February 01, 2011 at 10:03 AM