Former Freddie Mac chairman and CEO Richard Syron recently received a ‘Wells Notice’ from the Securities and Exchange Commission (SEC), which means the agency is considering filing civil charges against him related to his management of company.
Syron, who during his long career in banking and mortgages is also a past president of the Federal Home Loan Bank of Boston, is the third Freddie Mac official over the past month to receive a Wells Notice from the agency. The other two are former chief financial officer Anthony ‘Buddy’ Piszel, and Donald Bisenius, who once served as executive vice president of the GSE’s single-family credit guarantee business.
Among other things, the SEC is looking into financial disclosures Freddie (and Fannie Mae) made to investors regarding their investments and guarantees of nonprime mortgages, including subprime and Alt-A.
Syron joined Freddie in 2003, taking over as CEO in the wake of an expanding accounting scandal that had nothing to do with nonconforming mortgages. But under Syron’s watch Freddie (like Fannie) rapidly expanded its investments in nonprime loans and as of June 2007 (15 months before the GSE’s federal takeover) the company owned $170 billion in alt-A loans, an asset class where delinquencies are now north of 20%.
In a statement Syron’s lawyer said, “We have made a submission to the commission which demonstrates that Mr. Syron, as C.E.O. oversaw a very rigorous and fulsome disclosure process and that the company’s disclosures were in fact wholly accurate and complete.”
