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58 | Th e M Rep o RT O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SECONDARY MARKET The laTesT dOJ may charge individuals for roles in mortgage meltdown After showing reluctance toward prosecuting some institutions and individuals in the past, AG eric holder now opens the floor for criminal and civil cases against bank executives who contributed to the mortgage crisis. a ttorney General Eric Holder gave U.S. attorneys across the country 90 days to judge whether or not they want to bring cases against specific individuals for their alleged roles in 2008's mortgage crisis, according to reports. Speaking at a National Press Club event in February, Holder said federal prosecutors who have previously brought charges against firms for selling toxic mortgage- backed securities will be given an opportunity to investigate individual employees for potential charges, Reuters reported. Holder reportedly told the as- sembled press that prosecutors will have 90 days to report back on "whether they think they are going to successfully bring criminal or civil cases against those individuals." The announcement marks a policy shift for Holder, whose department has taken criticism from consumers and politi- cians frustrated with its failure to go after bank executives and some institutions following the crash. In early 2013, he famously remarked at a Senate commit- tee hearing that the size of some institutions makes it difficult to prosecute them without impact- ing the economy. He walked those comments back later, saying, "If we find a bank or financial institution that has done something wrong, if we can prove it beyond a rea- sonable doubt, those cases will be brought." The timing of the attorney general's announcement is also bound to raise questions: With Holder on his way out, the ultimate decision to prosecute would be made by his replace- ment, who right now is slated to be Loretta Lynch. Freddie mac ekes Out Profit despite derivative losses The GSe reported $7.7 billion in profits for the year. F reddie Mac reported another profitable quarter to end 2014, even as losses stemming from derivatives put heavy drag on the mortgage giant's earnings. For the last three months of 2014, Freddie pulled in $227 mil- lion in net income, the company said in February, a drop of near- ly $2 billion from Q 3. The sharp drop came from derivative losses, which totaled $3.4 billion for the quarter as interest rates fell. Freddie's fourth-quarter profit only make up a fraction of what it will pay to the government in March. Per the terms of its bailout agreement, the company will hand $900 million over to the Treasury, bringing its total payback to $91.8 billion—nearly $20 billion more than what it was forced to draw to keep from going under. The agreement, which was amended in 2012, stipulates both Fannie and Freddie must con- tinue paying Treasury dividends based on their net worth, even after they've repaid taxpayers in full. The terms remain a source of consternation for politicians, who are still grappling with how to separate the government from the mortgage market, and share- holders, who have brought suits against the government for their share of the companies' profits. For all of 2014, Freddie Mac re- ported $7.7 billion in net income, a drop from $48.7 billion in 2013. 2013's results were boosted by an accounting charge and benefits from securities settlements. All things considered, 2014 "marked another year of solid financial and operating perfor- mance" for Freddie Mac, said CEO Donald Layton. "We made tremendous progress in materially reducing taxpayer exposure to risk, increasing market share between the GSEs through improved customer focus and service, and making our op- erations better through innovation and efficiency," Layton said in the company's earnings release. Credit quality continued to improve at the GSE, with post-2008 vintages making up 60 percent of its single-family credit guarantee portfolio as of year-end. "[2014] marked another year of solid financial and operating performance." — Donald Layton, Freddie Mac

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