Attorney Fees
Taxpayers May Have to Pay Legal Bills of Fannie, Freddie Execs
Posted Nov 6, 2008, 07:35 am CDT
By Debra Cassens Weiss
Taxpayers would likely have to pay the legal bills of former executives at Fannie Mae and Freddie Mac if they are sued by dissatisfied shareholders or the federal government decides to prosecute.
The two mortgage companies that were taken over by the federal government had contracts with their executives that promised to cover their legal fees, the Washington Post reports. That means the government may now have the obligation to pay fees of executives who are not convicted and to pay any judgments obtained by shareholders.
Doug Heller, executive director of Consumer Watchdog, didn’t like that prospect. "Who'd have thought we might be on the hook for paying the defense costs when we're also paying the prosecution costs?" he told the Post.
The agency that controls the two mortgage companies, the Federal Housing Finance Agency, said in regulatory filings that it will fight payment of any legal fees. If the executives challenge a fee cutoff and win, the government may also be on the line to pay the fees incurred in the challenge, the story says.
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