Fannie, Freddie's Legal "Feeding Frenzy" Costs Taxpayers $434 Million

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Fannie, Freddie's Legal "Feeding Frenzy" Costs Taxpayers $434 Million

First you bailed out Fannie and Freddie. Now you're paying their legal bills.

Taxpayers have covered $434 million in legal fees for Fannie Mae, Freddie Mac, and their highly-paid executives since the federal government took over the wounded housing giants in September 2008, according to data (PDF) provided to Mother Jones by a congressional source.

A significant portion of those taxpayer-funded legal expenses—$163 million, or nearly 38 percent—was spent defending the two companies and their top brass, including former Fannie CEO Franklin Raines and CFO Timothy Howard, against charges of fraud, abuse, and other misconduct. Worse yet, a top state regulator currently suing Fannie Mae says the company is grossly overspending on its legal defense "to delay and stall, all while racking up astronomical legal costs and sticking America's taxpayers with the bill."

On Tuesday afternoon, a Congressional subcommittee will grill Fannie and Freddie officials on the two companies' lavish legal spending. The hearing is the result of an investigation by the House financial services committee's oversight and investigations subcommittee, which spent several months looking into how much the twin housing giants, known as government-sponsored enterprises (GSEs), have spent on outside counsel and legal defense. Fannie and Freddie's regulator says that so far, taxpayers have absorbed about $150 billion in overall losses from the two companies, a figure that could ultimately grow to nearly $400 billion. "Unfortunately, today, years after they were forced out of the company for their misdeeds, Franklin Raines and his management team have continued their abuse," Rep. Randy Neugebauer (R-Tex.), the chair of the investigations subcommittee, said in prepared remarks. "This time, however, it is against the US taxpayers."

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Fannie, Freddie's Legal "Feeding Frenzy" Costs Taxpayers $434 Million

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1. Another $434 million .... we could have used to actually help Americans ... !!