Attorneys for
three Fannie Mae officials sued by the Securities and
Exchange Commission asked a judge to dismiss the case on grounds that allegedly hidden — and
risky — loans didn’t meet company definitions as subprime or Alt-A loans.
In December,
The SEC accused the officials,
among them former CEO Daniel Mudd, of misleading investors about the amount of
subprime mortgages in Fannie’s portfolio.
But because
those loans didn’t fit Fannie’s explicit classifications, lawyers for the
officials said, those loan volumes cannot be considered an illegal
misrepresentation.
The defense
attorneys filed their motion to dismiss Friday. SEC spokeswoman Florence Harmon
declined to comment.
In the
complaint, the SEC said Fannie disclosed $8 billion of subprime loans on its
books in the second quarter 2008, shortly before the government placed them
into conservatorship. Fannie actually held far more, $110 billion, according to
the agency.
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