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NACA’S MARKS SAYS FANNIE, FREDDIE STILL BUYING SUBPRIME PRODUCTS
WASHINGTON, D.C., AUGUST 5, 2008

Fannie Mae and Freddie Mac never learn.

Just last week, taxpayers bailed them out of their subprime meltdown.

And yet, they still continue to buy subprime junk. That’s according to Bruce Marks, CEO of the non-profit Neighborhood Assistance Corporation of America (NACA).

“They continue to purchase interest only, ARM resets and other problematic loan products,” Marks told Corporate Crime Reporter.

“Fannie and Freddie should be prohibited from buying this stuff,” Marks said. “But I have evidence from the borrowers that Fannie and Freddie are still buying these products. They buy 50 percent of all mortgages. So, it might not be a huge chunk. But it is still significant.”

In September 2000, Marks went before a House committee and predicted that the government would be forced to bailout Fannie and Freddie because of their involvement in the subprime market.

And this year, Marks has opposed the bailout bill, saying that it would provide virtually no benefit to at-risk homeowners.

“The beneficiaries of the bailout bill will be Fannie and Freddie,” Marks said. “And it may cost the taxpayer $800 billion or more. It rewards these companies for their past failures.”

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FORMER INTERIOR OFFICIAL PLEADS GUILTY TO CONFLICT OF INTEREST CHARGE
WASHINGTON, D.C., JULY 30, 2008

A former official at the Mineral Management Service (MMS) at the Department of Interior pled guilty to a felony violation of the conflict of interest law.

Jimmy W. Mayberry, 65, a resident of Strawn, Texas, was charged in a single-count criminal information filed on June 25, 2008.

Mayberry pled guilty before Judge Henry H. Kennedy of the U.S. District Court for the District of Columbia.

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PAX WORLD SOCIALLY RESPONSIBLE FUND NOT SO LEGALLY RESPONSIBLE
WASHINGTON, D.C., JULY 30, 2008

Pax World Management Corp. told its investors that it ran a socially responsible investor fund.

That it would not invest in companies that derived revenue from alcohol or gambling, or from military contracts, or that violated environmental standards.

But today, the Securities and Exchange Commission (SEC) said that while Pax World said it wouldn’t, it in fact did.

The SEC said that Pax World, the SEC-registered investment adviser to several socially responsible mutual funds, including the Pax World Growth Fund and Pax World High Yield Fund, purchased at least ten securities that the Funds' socially responsible investing (SRI) restrictions prohibited them from buying – contrary to representations it made to investors and the boards of the Funds.

Pax World settled the SEC's charges and was ordered to pay a penalty of $500,000.

Pax World was represented before the SEC by William Paine of WilmerHale in Boston.

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NEW BOOK POINTS THE FINGER AT WALL STREET FOR SUBPRIME MELTDOWN
WASHINGTON, D.C., JULY 30, 2008

There are a lot of culprits in the subprime meltdown.

Lenders who took risky gambles, underwriters who didn’t underwrite, regulators who didn’t regulate.

But who was holding the gas tank, throwing fuel on the fire?

Wall Street.

“They are the guys with the can of gasoline,” said Paul Muolo, the editor in chief at National Mortgage News and co-author with Mathew Padilla of the just released book Chain of Blame: How Wall Street Caused the Mortgage Credit Crisis (Wiley, 2008). “Without Wall Street, we would not have seen this huge subprime bubble. If they weren’t supplying non-banks with warehouse lines of credit at dirt cheap prices, then turning around and buying subprime mortgages so they could turn them into mortgage backed securities, and in turn turning those into collateralized debt obligations – if they weren’t so heavily involved in this business, the subprime sector would never, ever have grown to the size that it did. At one point it was 26 percent of the market. In 2005 or 2006, subprime originations were like $1.6 trillion. Wall Street was the liquidity monster here.”

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FORMER GE ATTORNEY KOECK SAYS SHE WAS FIRED FOR REPORTING FRAUD
WASHINGTON, D.C., JULY 28, 2008

Adriana Koeck says she was fired from General Electric for reporting fraud to her superiors.

That’s according to her Sarbanes Oxley (SOX) whistleblower complaint filed with the Department of Labor, a copy of which was obtained today by Corporate Crime Reporter.

Koeck is being sued by GE in federal court in Alexandria, Virginia for taking confidential and privileged information from GE and feeding it to former New York Times reporter David Cay Johnston, among others.

Corporate Crime Reporter has learned that the information was also given to the Department of Justice Fraud Section, which is conducting an initial review of the case.

“At this point in time, the Department can neither confirm nor deny an investigation,” said Department spokesperson Laura Sweeney.

GE’s Jeffrey DeMarrais said that GE was confident that Koeck’s claims are “without merit.”
“We will respond in court,” DeMarrais said.

Johnston based his reporting on hundreds of pages of internal GE e-mails, memos, and legal opinions.

“A lawyer for a participant in some of the events provided the documents on the condition that the source not be identified,” Johnston wrote.

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