How Fannie's Silence Opened Way to $3B Fraud

Bloomberg reports:

The first sign of what would ultimately become a $3 billion fraud surfaced Jan. 11, 2000, when Fannie Mae executive Samuel Smith discovered Taylor, Bean & Whitaker Mortgage Corp. sold him a loan owned by someone else.

Fannie Mae, the government-sponsored enterprise which issues almost half of all mortgage-backed securities, determined over the next two years that more than 200 loans acquired from Taylor Bean were bogus, non-performing or lacked critical components such as mortgage insurance.

That might have been the end of Taylor Bean and its chairman and principal owner, Lee Farkas. He was sentenced today in federal court in Alexandria, Virginia, to 30 years in prison for orchestrating what prosecutors call one of the “largest bank fraud schemes in this country’s history.”

Instead, it was just the beginning.

No comment on this one from former Fannie Mae board member William Daley or his boss Fannie Mae "family member" Barack Obama.