Sen. Scott Brown calls for criminal probe of Fannie, Freddie

Sen. Scott Brown (R-Mass.) is calling for a criminal investigation of Fannie Mae and Freddie Mac, saying recent civil claims filed against former executives do "not go nearly far enough to achieve justice."

Brown sent a letter to Attorney General Eric Holder and Securities and Exchange Commission (SEC) Chairman Mary Schapiro on Thursday saying that a fresh investigation into the housing giants' actions leading up to the financial crisis is needed.

"If the investigation uncovers illegal actions, criminal prosecution should be pursued and people should go to jail," he wrote.

The letter comes six days after the SEC announced it was suing six former executives at the government-sponsored enterprises (GSEs), alleging they downplayed the entities' exposure to risky sub-prime mortgages as the housing bubble burst.

But Brown maintained in his letter that the hefty bailout needed to save Fannie and Freddie — $150 billion and counting — merits a closer look by investigators.

He added that the government has shown a "troubling pattern" of being "too timid" when dealing with the GSEs, pointing out that accounting scandals that drove out top executives in 2003 only resulted in civil charges.

"Fannie Mae and Freddie Mac were among those institutions at the very center of the crisis," he wrote. "Now is not the time to give up in the pursuit of justice."

Brown's plea came two days after Republicans on the House Financial Services Committee demanded answers from the Federal Housing Finance Agency's (FHFA) policy of covering the legal expenses of former Fannie and Freddie executives.

In a letter to FHFA Acting Director Edward DeMarco, the four members point out that the new SEC charges will "undoubtedly add to that tab." The letter stated that the FHFA had provided $72.6 million for that purpose since the GSEs entered federal conservatorship.

"We firmly believe that advancing hundreds of millions of taxpayer dollars in legal fees without administrative guidance or an outright cap is not in the best interest of the American taxpayers," they wrote.

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