Sunday, April 24, 2005

Will Lawsuits Bring Fannie Mae Down?

Problems keep piling up for mortgage bank Doral Financial. "A shareholder class action lawsuit by request and on behalf of purchasers of Doral Financial Corp. securities was being filed today." If you look at the charges, isn't that exactly what Fannie Mae did a thousand times larger?

"It is alleged that during the restatement period Doral falsely reported its results ..thereby overstating its net income and revenue and understating the Company's net liabilities in violation U.S. GAAP. The Complaint alleges that this enabled certain insiders to reap more than $10,000,000 dollars in insider trading profits, as well as cash incentive bonuses." How many executives at the GSE's have been fired for the same thing?

"Rather than come clean and disclose that they had been misleading investors, it is alleged that Doral attempted to further this allegedly false story." Add the cherry-picked mortgages and off-shore "entities" to the derivative puzzle and it may be that lawsuits finish off Fannie, not congress.

2 Comments:

At 2:06 PM, Blogger John Law said...

it's sad- the rich and ultra-rich of the companies(and throughout the nation) will just sail on through. sure some of them will have great loses on paper, but they all can pay for good advice to diversify their money. meanwhile, while they play their games the shareholders and the victims of the economic distortions get the short end of the deal.

if some of the homebuilders and REITS go under, who care, the insiders will have sold and cashed in their winnings. the company may be crap, but they still have their $50,000,000 mil!

 
At 2:25 PM, Blogger Ben Jones said...

John,
Good point and probably the reason we never see any real reform.

 

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