The Securities and Exchange Commission may be close to a settlement with Fannie Mae and Freddie Mac over their descent into subprime housing loans and lack of disclosure surrounding them, but the path to resolution is not smooth.
Although the deal now contemplated lacks an admission of fraud or any financial penalty for mortgage deals that helped spark the financial crisis, a willingness to settle at all could serve as a tacit admission of guilt by the mortgage companies and fuel charges that they misled investors, according to a Thursday New York Times report.
The absence of fines was characterized as more a signal of the shaky fiscal status of the two mortgage finance giants than a mark of leniency, The Times said. After all, taxpayers would end up footing the bill for any financial penalties, on top of the more than $100 billion already spent by the government in keeping Fannie and Freddie afloat.