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Post-GSE conservatorship legal fees to be studied
WASHINGTON (2/11/11)—A House Financial Institutions subcommittee will study legal fees paid on behalf of former top executives of Fannie Mae and Freddie Mac. The subcommittee on oversight and investigations, chaired by Rep. Randy Neugebauer (R-Texas), will convene Feb. 15 to examine millions of dollars of fees paid in defense of securities-related lawsuits against the companies and their executives. Announcing the hearing, Neugebauer said, “More than $160 million of the taxpayer’s money has been spent” to defend “the officials who led those organizations prior to, and during the subprime mortgage mess.” He added that the expenditure “raises serious questions about the conservators’ responsibilities to prevent any further losses to the American taxpayer on those legal fees. Since the imposition of the conservatorship, Fannie Mae has paid approximately $24 million in legal fees for former executives, including Franklin Raines ($7.9), Timothy Howard ($4.5), and Leanne Spencer ($11.8) to defend civil suits alleging they failed to meet their duties, the subcommittee hearing notice said. Moreover, an additional $30 million has been spent defending other officers and directors. Witnesses will be announced at a later date.


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