Tick Tock. Tick Tock. In a scenario reminscent of the classic game show Press Your Luck. It appears Former Fannie Mae CEO Daniel Mudd may get a reprieve courtesy of new Dodd-Frank stopwatch. Mudd was put on notice March 11th that he could face regulatory action for his role in misrepresenting the underwriter's subprime exposure to investors and government agencies. But Dodd-Frank amendments enacted last year introduced a 180 day time limit compelling Commission staff to "either file an action or provide notice to the Director of the Division of Enforcement of its intent to not file an action,” within 180 days of the Wells Notice.
The probe centers on his time at Fannie Mae and his role in creating the subprime debacle that would shock the country and the world. But given the radio silence, observers wonder if new admendments that were intended to make the agency more proactive in handling such cases have backfired.
An alternate theory is that the inaction is related to reports that the SEC is winding down its investigations of Fannie & Freddie the NY Times reported that Fannie settlement talks were underway and fraud charges would likely be dismissed.
As we explore more in the Pomerantz Monitor this month. Fannie & Freddie Conservator the FHFA also announced in early September that they'll seek to recover $196 billion in new actions against 17 banks for misrepresenting CDO risks to the underwriters.
For his part, Mudd has shown little remorse. His failure, he said, was only that he could not maintain the “delicate balance,” required to meet such expectations. Since taking over the CEO position at Fortress Investment Group Mudd's appetite for subprime has continued unabated. In May, the publicly traded hedgefund unveiled subprime bond Springleaf acquired from AIG. They even managed to secure triple A rating from S&P after that agency had downgraded US treasury securities.
So far, for Mudd its big bucks, and no whammies.
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