Wednesday, November 7, 2007
The Office of Federal Housing Oversight (OFHEO) and former Freddie Mac chair Leland C. Brendsel settled accounting fraud charges midway through his regulatory trial. Brendsel will pay $13 million and give up claims for additional compensation from Freddie Mac. OFHEO had sought over $1 billion in damages and penalties. The government said the money would be used to assist home owners at risk of losing their homes.
Freddie Mac had engaged in a practice of smoothing out profits over years to present a picture of stable earnings growth. It previously agreed to settle for $590 million.
Warren Buffett testified at Brendsel's trial for the government that he liquidated his holdings in Freddie Mac because of his concerns over the company's earnings projections. WPost, Brendsel, OFHEO Agree to Settle Freddie Ex-CEO to Pay $16.4 Million.