<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Jonathan Weil</p> <p>If you enjoy theater of the absurd, it's hard to beat the Securities and Exchange Commission's <a title="Link to SEC release" href="http://sec.gov/news/press/2011/2011-267.htm">press release</a> today about the agency's lawsuits accusing six former Fannie Mae and Freddie Mac executives of securities fraud.</p> <p>The caption immediately below the main headline says: "Companies Agree to Cooperate in SEC Actions."</p> <p>Now, let's see. Fannie and Freddie are wards of the state, majority-owned by the Treasury Department. And their conservator, the Federal Housing Finance Agency, has total control over everything they do. Getting those cooperation agreements from the companies must have been a real toughie.</p> <p>Then there's this: "Fannie Mae and Freddie Mac each entered into a non-prosecution agreement with the commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon statement of facts without admitting nor denying liability."</p> <p>So you see, it's not just the Citigroups of the world that benefit from these neither-admit-nor-deny deals that the public despises so much. Government-owned companies get to take advantage of them, too. And why not? They need protection from the government as well, right?</p> <p>Another noteworthy part about the two lawsuits against the six former Fannie and Freddie executives -- unlike the companies, they are contesting the SEC's allegations -- is that the word "accounting" doesn't appear in either suit. The SEC accused the defendants of disclosure fraud, but made no mention of any possible <a title="Link to related column" href="http://www.bloomberg.com/news/2011-03-16/moral-for-ceos-is-choose-your-fraud-carefully-commentary-by-jonathan-weil.html">accounting </a>violations at the companies, notwithstanding that the twin collapses of Fannie and Freddie marked one of history's great accounting scandals.</p> <p>Oh well, the government must have had its reasons. Maybe the companies' regulators knew how Fannie and Freddie were <a title="Link to related column" href="http://www.bloomberg.com/apps/news?pid=newsarchive&amp;refer=columnist_weil&amp;sid=aB5s3oci5VH8">cooking their books</a> all along.</p> <p>(Jonathan Weil is a Bloomberg View columnist.)</p> <p> </p> </body> </html>