Those Who Designed the Foreclosure Crisis is Now Helping to Solve the Problem
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Those who designed the foreclosure crisis is now helping to solve the problem of huge numbers of foreclosed houses Fannie and Freddie are sitting on. The top brass from some of the mega companies that brought about the foreclosures crisis are now submitting proposals to the FHFA about what can be done with the millions of residences that Fannie Mae and Freddie Mac are sitting on and how these could be turned into rentals.
Daniel Mudd of Fortress (CEO) decided to take leave, a strategic move, after facing a lawsuit on 16th December by SEC questioning his part while he was CEO of Fannie Mae from 2005 till 2008. Fannie and Freddie have been helped by the Treasury to tune of $170 billion after being taken over in 2008 by the federal government.
Mudd and the former CEO of Freddie Mac, Richard Syron have been charged by SEC of making understatements regarding the sub-prime loans that the firms had held amounting to billions. Mudd has replied that the investors as well as the government knew of “every piece of material data about loans held by Fannie Mae”. The lawyer of Syron, Tom Green said there “was no shortage of meaningful disclosures” on the part of Freddie Mac.
Fortress’ spokesperson Gordon Runte did not make any comments regarding the issue of submission of proposal by his firm. In a statement dated 16th December Fortress has said that the suit filed against Mudd is not related in any way to Fortress.
Greg Lippman of Deutsche Bank (trader) hosted a meeting, the first of its kind, of lawyers and investors who had crafted the contracts and the financial tools that were used while betting against the housing market. During the time of the crisis from 2007 till 2008 Lippman had assisted Deutsche Bank to counterbalance the losses it had incurred on mortgage related investments.
A spokesperson of Deutsche Bank, Renee Calabro did not make any comments. Lippman is now the chief-investment-officer with LibreMax Capital – hedge fund based in New York. It has not made any submissions to FHFA. FHFA cited five examples of the proposals that had been submitted. The details were not disclosed because of trade policies; the privacy of those who submitted the proposals also required to be honoured.
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