The Securities and Exchange Commission has filed charges against 6 former executives of Fannie Mae and Freddie Mac, claiming that they knowingly misrepresented facts regarding their high-risk home mortgage loans. The SEC suit claims that the executives approved of misleading statements, downplayed the size of their subprime loans and lied when they said their risky investments were minimal and manageable.
Not too long ago Fannie Mae and Freddie Mac received $124 billions dollars in federal bailout money, as the company suffered huge losses due to the mortgage crisis. This bailout occurred while these executives were paying themselves roughly $100 million dollars.
With the lawsuit, the SEC is seeking financial penalites against the executives. The executives, through their attorneys, are denying the charges.
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