Sep 9, 2008

William Norman Grigg: What will happen to the CEOs of Fannie and Freddie in the wake of a government takeover

Fannie CEO Daniel H. Mudd, and Freddie CEO Richard Syron engaged in fraudulent bookkeeping right up to the eve of the federal takeover by deliberately overstating their capital holdings and financial health. However, neither of them faces criminal or civil prosecution. In fact, strictly speaking they're not even being fired: They will both eventually "step down" from their current posts, but will be given sinecures of some kind.

Solicitude of this kind is routinely displayed toward those who had helped generate hundreds of billions of dollars in perfectly rotten mortgage loans as part of a corrupt scheme to boost executive compensation through dishonest accounting methods. Fannie and Freddie practiced Enron-onomics and Arthur Andersen-style accounting on steroids, in the serene confidence that the taxpayers would eventually have to absorb the costs and that nobody of any consequence in those agencies would suffer significant repercussions.

That confidence, as we can see, was entirely justified.

~ William Norman Grigg, "Washington's Kleptocratic State: 'More Communist Than China',", September 9, 2008

No comments: