Insider's Game

The Mortgage Wars, by Timothy Howard, garnered favorable reviews, though some reviewers seemed reluctant to accept the author’s claim, that the government’s charges against Fannie Mae, pertaining to accounting violations, were baseless and politically motivated.

They have reason to be skeptical. As Fannie’s former CFO, Howard is the opposite of an unbiased party. In 2004 the allegations caused Howard, along with CEO Franklin Raines and controller Leanne Spencer, to lose their jobs. And they faced a class action lawsuit for securities fraud, which dragged on for eight years.

Finally, in late 2012, U.S. District Court Judge Richard Leon dismissed the cases against all three. He ruled that there was zero credible evidence to suggest that Howard, Raines or Spencer had ever intended to deceive anyone. He also ruled that the charge of improper earnings manipulation, which was the basis of an earlier SEC lawsuit alleging securities fraud, was not supported by evidence.

Would Regulators Deceive the Public?

Still, reviewers seem to believe that there had to be something there, that U.S. regulators would not simply fabricate bogus charges of whole cloth.

Except that is precisely what happened. The Fannie Mae “accounting scandal,” is an especially timely parable to remind us how easily members of Congress and the media are bamboozled by an onslaught of doublespeak.

Continued in: National Mortgage News