Thursday, June 30, 2011

The Fan/Fred Criminal Hustle

Let's face it. The GSE's Fannie and Freddie were corrupt beyond the wildest dreams of Richard Daley.

The first sign of what would ultimately become a $3 billion fraud surfaced Jan. 11, 2000, when Fannie Mae executive Samuel Smith discovered Taylor, Bean & Whitaker Mortgage Corp. sold him a loan owned by someone else.

Fannie Mae, the government-sponsored enterprise which issues almost half of all mortgage-backed securities, determined over the next two years that more than 200 loans acquired from Taylor Bean were bogus, non-performing or lacked critical components such as mortgage insurance. What did Fannie do about it?

Fannie Mae officials never reported the fraud to law enforcement or anyone outside the company. Internal memos, court papers, and public testimony show it sought only to rid itself of liabilities and cut ties with a mortgage firm selling loans “that had no value,” as Smith, the former vice president of Fannie Mae’s single family operations, said in a 2008 deposition.

Frank Raines departed Fannie with a bazillion-dollar retirement package...

Put down your coffee NOW.

Taylor Bean would have collapsed in 2002 “but for the fraud scheme,” according to prosecutors. It also survived because Freddie Mac began picking up the company’s business within a week of Fannie Mae’s cutoff, Jason Moore, Taylor Bean’s former chief operating officer, said in an interview. Freddie Mac soon became Taylor Bean’s biggest customer,...

Pitchforks and tar? Or just a loosely-organized firing squad?

Your choice.

HT: Ticker

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