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No Criminal Charges for Fannie Mae Fraud

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posted on Aug, 25 2006 @ 09:34 AM
After an investigation spanning two years into alleged multi-billion dollar fraud, federal prosecutors announced Thursday there will be no criminal charges brought against loan giant Fannie Mae. Potential administrative and civil actions are still under consideration.
Federal prosecutors in Washington confirmed they had shut down their investigation of Fannie Mae's faulty accounting after two years. But the Securities and Exchange Commission still could bring civil actions against individual executives, including people no longer at Fannie Mae, with the burden of proof less stringent than in criminal prosecutions.

Regulators said the scheme included manipulations to reach quarterly earnings targets so Fannie Mae executives could pocket hundreds of millions in bonuses from 1998 to 2004. Also, the discovery of falsified signatures on company documents supporting those accounting transactions had raised the possibility of criminal activity, according to some experts and observers.

"We have informed them that we are declining all charges against the company," said Channing Phillips, spokesman for U.S. Attorney Kenneth Wainstein.

Washington-based Fannie Mae helps finance one of every five home loans in the United States and is the second-largest U.S. financial institution after Citigroup Inc.

Fannie Mae's government-ordered restatement of its earnings is expected to be completed by year's end and to reach $10 billion, among the highest total in U.S. corporate history.

Christopher Cox, the SEC chairman, has cited "the many accounting failures that occurred at Fannie Mae, from books-and-records violations to fraud."

Fannie Mae's political clout is legendary, fostered by its large donations to lawmakers of both parties. Its roster of executives and directors long has featured Washington insiders.

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Looks like that political clout won the day for Fannie Mae this time around. They paid a $400 million fine and "forced out" the CEO and CFO, but now its back to business as usual.

I guess this case just hit too close to the bone in Washington. Too many big names with their hand in the cookie jar. We, the public, are supposed to be satisfied with the example made of Enron, while its business as usual for the rest of the corporate world lining the pockets of Washington insiders.

[edit on 25-8-2006 by DontTreadOnMe]

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