Jonathan Weil argues that a special prosecutor should be appointed to hold the government responsible for its role in the Fannie Mae and Freddie Mac disaster in his column, “SEC’s Fannie, Freddie Lawsuits Miss The Enablers:”
Let’s boil down the Securities and Exchange Commission’s claims last week against six former Fannie Mae and Freddie Mac executives to their essence. Every disclosure that the SEC says amounted to fraud is something the government blessed or turned a blind eye to as it was happening.
So who is holding the regulators accountable for letting these alleged frauds go on? No one, naturally.
To believe the SEC’s lawsuits, you would think the only false and misleading statements the housing giants made before the government took them over had to do with the makeup of their loan books and how much of them were subprime, prime, or what have you. The truth is that Fannie and Freddie engaged in far greater financial-reporting abuses, which couldn’t have happened without the government’s knowledge and cooperation.