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Fatal Flaws In The Lawsuit Against Fannie Mae Execs, Part 2

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The SEC claims that the "true" Alt-A amounts were twice as high as the reported Alt-A amounts. For instance on March 31, 2008, Fannie reported $311 billion in Alt-A loans, and the SEC says that Fannie omitted approximately $323 billion from the total Alt-A amount. But since the "undisclosed" Alt-A loans had a serious delinquency rate that was about half that of the disclosed Alt-A loans, inclusion of those additional loans would have significantly improved the delinquency and default rates for that risk category.

Which is why the SEC will never be able to prove that senior management had the specific intent to deceive investors, or that investors were clearly harmed by by Fannie's categorizations. 

For Fatal Flaws In The Lawsuit Against Fannie Mae Execs, Part 1, go here.

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For over 20 years, David has been a banker covering the energy industry for several global banks in New York. Currently, he is working on several journalism projects dealing with corporate and political corruption that, so far, have escaped serious (more...)

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David, this is a well written, detailed analysis o... by Gustav Wynn on Thursday, Dec 29, 2011 at 8:51:28 PM
GustavOften, I don't know what to explain and what... by David Fiderer on Thursday, Dec 29, 2011 at 11:24:30 PM
Interesting - it seems like this might be a result... by Gustav Wynn on Friday, Dec 30, 2011 at 4:40:02 PM
But I think the driving force behind the case was:... by David Fiderer on Friday, Dec 30, 2011 at 5:57:55 PM