Federal Housing Sues ex-Fannie Mae Executives

The Office of Federal Housing Enterprise Oversight (Ofheo), perhaps, making up for years of lenient oversight, is seeking fines against three senior ex-executives of Fannie Mae for the company's accounting mess.  Fannie Mae has recently announce a restatement of its financials that cut its retained earnings by over $6.3 billion. The primary claim is for a "claw back," a restitution of $85 million in bonuses, stock options and other compensation paid the officers during the period in which the finanicals were incorrect (1998 to 2003).  Ofheo has also sued two former officers at Freddie Mac for return of compensation for accounting errors as well.  Both corporations are charted by Congress to buy home mortgages from lenders and securitize them, package them into securities for resale to the public markets. The other major pending claw back case is that of Richard Grasso, who as past president of the NYSE, is pursued by the New York Attorney General's office.  These cases, once very rare, will be more frequent.  Although arduous and difficult to win, the public outrage over executives escaping troubled companies with hordes of cash is loud and growing.  At issue is whether public officials have the staying power to pursue such cases over four or five years to their eventual conclusion.  Sarbanes-Oxley's automatic claw back of performance bonuses when there is a restatement in the financials will make some of these cases much, much easier.