WASHINGTON (Reuters) – A government watchdog on Wednesday said Fannie Mae (OTC BB:FNMA.OB – News) and Freddie Mac‘s (OTC BB:FMCC.OB – News) regulator needs to curtail the rising cost of their legal expenses since there is no end in sight to the widening taxpayer tab keeping the two firms afloat.
Fannie Mae and Freddie Mac are spending tens of millions of dollars to cover the legal costs of former executives who face various private, class-action lawsuits and government investigations, according to the report.
The overseer of the two firms, the Federal Housing Finance Agency, needs to limit litigation costs, the agency’s inspector general said in the report.
FHFA agreed to pay to defend the agencies and former officers when Fannie Mae and Freddie Mac were taken over by the government in 2008, and they have yet to cut off funding for the mounting legal bills.
“FHFA must continue its efforts to both control and scrutinize these legal expenses now and in the future,” Steve Linick, inspector general of the finance agency, said in a statement.
From 2008 through 2011, Freddie Mac has advanced about $10.2 million for legal representation of its officers and directors, according to the report. The
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