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The Securities and Exchange Commission is going after top executives at Fannie Mae and Freddie Mac for committing securities fraud. The six executives are all former employees of the firms, which had to be taken over by the government in 208 and propped up by taxpayers. The SEC says the executives misled investors about the firms' exposure to subprime mortgages. NPR's John Ydstie has our story.

JOHN YDSTIE, BYLINE: Critics had accused the Securities and Exchange Commission of taking a perpetrator-free approach to the financial crisis, accusing corporate entities of wrongdoing instead of CEOs. But today, the SEC went to court and charged six top executives, including CEOs. Here's the director of the SEC's enforcement division, Robert Khuzami, at a news conference.

ROBERT KHUZAMI: Our suits reach into the corporate boardrooms and name the former CEO of Fannie Mae, Daniel Mudd, and the former chairman and CEO of Freddie Mac, Richard Syron.

YDSTIE: The charges allege that Mudd and Syron and the others misled investors by claiming that their companies had minimal holdings of subprime and other high risk mortgages. The SEC's Khuzami says Freddie Mac made that claim in its annual report for 2006 when Syron was its CEO.

KHUZAMI: In fact, the company had $141 billion of subprime exposure, representing 10 percent of its single-family portfolio as of December 31, 2006.

YDSTIE: And by June of 2008, Freddie's subprime exposure had grown to $244 billion. Karen Petrou of Federal Financial Analytics says her company knew Fannie and Freddie were not disclosing all their subprime loans.

KAREN PETROU: What we didn't know and what does surprise me is the magnitude of the differences. We knew they were wrong. We did not know they were howlingly wrong.

YDSTIE: In Freddie Mac's case, she says, for a CEO not to know his company owned $244 billion in shaky mortgages would be equivalent to not knowing your company owned a major bank. Richard Syron has not commented on the charges. But Petrou says the company's regulator, the Office of Federal Housing Enterprise Oversight, should have known too.

PETROU: They didn't. That's appallingly clear because if they had been effective regulators, we wouldn't have Fannie and Freddie in conservatorship costing the taxpayers $170-plus billion to date and not counting the billions more to come.

YDSTIE: The SEC's complaint against Daniel Mudd and the other Fannie Mae executives says they misrepresented the size of their firm's exposure to shaky mortgages too. The executives put the number at $4.8 billion in 2007 when it was really $43 billion, according to the SEC.

Mudd's lawyer says his client did not mislead anyone. In a statement, Mudd said that the government-appointed executives that succeeded him had signed the same disclosures he did, but they're being held blameless so the government can sue individuals fired years ago.

Law professor John Coffee of Columbia University says the SEC should be congratulated for finally focusing on the wrongdoing of top executives.

JOHN COFFEE COLUMBIA UNIVERSITY LAW PROFESSOR: There needs to be individual corporate accountability on the part of these senior executives before we're going to get adequate deterrence and a greater chance of avoiding the next financial meltdown.

YDSTIE: Since this is a civil action, the executives will not have to go to jail if they're found guilty. They could pay financial penalties and be forced to return ill-gotten gains. Both Mudd and Syron made more than $30 million between 2006 and 2008. John Ydstie, NPR News, Washington.

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