Dec. 21, 2011 – The Securities and Exchange Commission sued six executives of Fannie Mae, which along with fellow federally-backed mortgage giant Freddie Mac cost U.S. taxpayers more than $150 billion (and counting) as a result of the 2008 financial crises they helped cause. Then CEO Daniel Mudd was the leader as Fannie loosened underwriting standards, one of the underlying causes of the greatest financial meltdown since the Great Depression.
Both Fannie and Freddie still guarantee most residential mortgages in the U.S. Mudd is accused of misrepresenting to investors the investment risks being taken by this mortgage market maker. The Daily Caller says federal regulators estimate the taxpayer bailout “tab could hit $259 billion.”
53-year-old Mudd had left the furor at Fannie to take over as CEO of Fortress Investment Group hedge fund company. Fortress was managing $43.6 billion in assets as Mudd’s lawsuit-inspired leave of absence took place. So pleased was the Fortress Fund to get the talents of this big-time failed chief executive, they paid Mudd a total compensation of $3.3 million last year along with restricted stock options worth $25 million in stock options, according to the Wall Street Journal. He is taking a paid leave of $200,000 guaranteed base salary as the case goes forward.