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Will Steady Freddie lose his cool?

Sam Eaton Oct 15, 2007
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Will Steady Freddie lose his cool?

Sam Eaton Oct 15, 2007
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TEXT OF STORY

Scott Jagow: The former CEO of the mortgage giant, Freddie Mac, goes to court today. It’s been four years since he was accused of accounting fraud. Sam Eaton reports.


Sam Eaton: Leland Brendsel may have fortified Freddie Mac’s reputation as “Steady Freddie.” The tactics he used to achieve those famed smooth earnings are the subject of today’s trial-like hearing before a federal administrative law judge.

Brendsel is accused of orchestrating an accounting scandal to the tune of billions of dollars. His defense team argues that Brendsel wasn’t aware of the alleged accounting fraud.

But Jeffrey Sonnenfeld with the Yale School of Management says Enron’s Ken Lay already tried that strategy and failed.

Jeffrey Sonnenfeld: It’s the Sargent Schultz defense. You know, that “I know nothing” from the old Hogan’s Heroes TV show.

The federal government wants Brendsel to face fines and repay tens of millions of dollars in salary and benefits.

The witness list includes the likes of billionaire investor Warren Buffett. He’s expected to testify about his decision to liquidate 60 million shares of Freddie Mac stock in 2000, as well as any discussions he may have had with Brendsel about “inappropriate accounting.”

I’m Sam Eaton for Marketplace.

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