FHLMC Sued, Moody's Limiting Downgrades

Mr Reimer, take a number and get in line

Today, Scott Reimer, a shareholder, sued Freddie Mac. Reimer claims that CEO Richard Syron and some other executives…

did not adequately implement risk control measures to protect the company from acquiring billions of dollars worth of mortgages with poor underwriting standards.

Moreover, the company's procedures for appraisals led to many inflated appraisals, increasing the risk of defaults.

Ultimately, the company has reported billions of dollars in losses, has been mentioned in investigations by the New York attorney general and announced it must raise new capital to meet regulatory requirements
."

Hank Paulson said the number of potential home-loan defaults "will be significantly bigger" in 2008 than in 2007. Do you think any of the fat cats are worried?

Hell no, they made their bonus money and are as usual, down the road. Only the stockholders and taxpayers will pay in the end, no pun intended.

What makes Mr. Reimer think that the "justice" system will allow FHLMC or any Wall Street firm or lender to take the fall? The game is rigged from top to bottom.

August 27th, 2007 in
Alchemy II: "Rest assured, the ratings agencies have been told to put on a dunce cap, sit in a corner and act like Tommy (deaf, dumb & blind).

As long as the Fed is holding large amounts of ABCP or MBS, there will be very limited debt rating downgrades...

and a feeding frenzy by the big sharks on the small fish who do get downgraded
."

David Einhorn in a
must read on the ratings game. "In early September, a senior Moody's executive at a small private dinner sponsored by one of the brokerage firms:

"Moody's would never lower the credit ratings of a financial guarantor, because that would put the guarantors, out of business
." Nuff said.

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