The U.S. Securities and Exchange Commission filed lawsuits today in Manhattan federal court against Richard Syron, the former CEO of Freddie Mac, and Daniel Mudd, the former CEO of Fannie Mae, for their public comments about subprime loans. The regulator also sued Freddie Mac's former executive vice-president and a senior vice-president, as well as Fannie Mae's former chief risk officer and executive vice-president. Freddie Mac and Fannie Mae are not named as defendants in the suit. In their filing, the SEC said, "This action arises out of series of materially false and misleading public disclosures."
As Bloomberg reports, Mudd served as Fannie's CEO from 2004 until 2008, when the government took over, but claimed in 2007 that the company's work with subprime mortgages "remains minimal, less than 2.5 percent of our book." Syron said Freddie had not "been heavily involved in subprime all along." Their losses, and now this lawsuit, say otherwise.