Federal Regulators C*ckblocking Former Freddie Mac Employees from Snitching
h/t Skeptical CPA, who asked me after sending me this "Do you still believe in regulation?" My answer? "Just like I believe in Santa Claus. Do I still believe in regulation? Yes. The regulation itself has never changed, it will always be what it is. Do I believe in the regulators? No."
For the record I never have believed in the regulators but I'm not about to let a little $14 trillion mistake change my world view of regulation. I know, I know, it goes against every libertarian sensibility I claim to have but recent events have only confirmed my fear that the irrationality of men can trump that of markets any day.
Until we start mandating Xanax for market participants, we're just going to have to suck on the regulatory madness and be content. But this particular madness needs more than a little Xanax, sounds like these federal regulators could use a nice ass kicking for starters. Perhaps then the Alan Greenspan treatment?
One year after the government took over and bailed out Freddie Mac, the giant mortgage finance company, federal regulators are blocking former employees from revealing information to investors who are suing the company for fraud, lawyers for shareholders say.
The Treasury has propped up Freddie Mac with more than $50 billion in taxpayer money since the company nearly collapsed more than a year ago, and officials warn that the company will probably need additional billions in the months ahead.
Federal prosecutors in Virginia and the Securities and Exchange Commission are already investigating whether the company misled investors about the risks it was taking with securities backed by subprime mortgages and no-document loans.
But in a battle that will surface on Friday in a federal courtroom in New York, the company and its primary government overseer, the Federal Housing Finance Agency, are trying to enforce secrecy agreements that scores of former employees signed as a condition for receiving severance payments when they left the company.
In their class-action lawsuit against Freddie Mac, three big union-based pension funds charge that Freddie Mac executives defrauded investors by concealing the company’s exposure to high-risk mortgages, its mounting losses and its inadequate capital position.
As long as the Chinese government is stuck with all those bitch ass Freddie securities you can sue them all you want, you're not getting anything out of them. Come on now, people.
Can I edit my previous statement to read Fuck yes I've lost my faith in regulation and in humanity while we're at it?
Careful, Freddie, your people are talking and you wouldn't want this getting back to the Chinese or anything now would you?
Several former employees, who insisted on anonymity, confirmed that they were eager to talk with the shareholder group and said they might have valuable information.
“I would say more, but I don’t want somebody knocking on my door and asking for $50,000 back,” said one former employee who worked on Freddie Mac’s internal financial controls. “It’s almost like bribery; I felt that I was supposed to sign the agreement, take the money and keep all their secrets.”
The severance deals were so strict, according to former employees, that they prohibited those who accepted them from saying almost anything about their old jobs or even about the secrecy pledges themselves.
“I was told that in volunteering to take a buyout, I couldn’t even talk about the agreement or it would be off the table,” said an 18-year veteran of Freddie Mac, who insisted on anonymity because of the restrictions. “I was told that you don’t talk about the terms of agreement, you don’t talk to the news media and you don’t talk to attorneys involved in lawsuits against the company.”
Pssst, former employees, come sit on Jr Deputy Accountant's lap and tell her allllll about whatever it is that's eating you up inside. Promise your secrets are safe with me. Screw those federal regulators, they're idiots anyway.