Freddie Mac is the second-largest financier of home mortgages, and they had to pay a fine of $50 million to settle fraud charges. The company is located in Boston, Massachusetts, and the people involved in this scandal were president/COO David Glenn, chairman/CEO Leland Brendsel, ex-CFO Vaughn Clarke, former senior VPs Robert Dean and Nazir Dossani. They were caught intentionally misstating earnings on the books, and they were caught in an SEC investigation. The penalties included $125 million in fines and the firing of Glenn, Clarke and Brendsel.
Both companies were housing giants
Freddie Mac CEO Richard Syron and Fannie Mae CEO Daniel Mudd
Waiting to be testified on Capitol Hill in Washington
Rep. Rahm Emanuel
Director of Freddie Mac
- About a year later, the other government-sponsored enterprise Fannie Mae was caught in an extremely similar accounting scandal.
- In the end, Clarke agreed to pay $29,227 in restitution. Glenn paid a $250,000 civil fine and $150,000 in restitution, Dean paid a $65,000 fine and $34,658 in restitution, and Dossani paid a $75,000 fine and $61,663 in restitution.
- Fannie and Freddie were created to make mortgages affordable and to put cash into the market by buying plots of home loans from lenders and turning them into securities to sell to investors across the world.