Ohio State Journal of Criminal Law

OSJCL Amici Board of Advisors

OSJCL Amici: Views from the Field

Government's Duty to Defend Fannie and Freddie

As federal investigators continue to look into potential criminal wrongdoing by executives at Freddie Mac and Fannie Mae, it has been discovered that the government also –likely unwittingly- has assumed the duty to defend these same executives in any prosecutions resulting from the investigations. The contracts for many of these individuals includes a stipulation that the companies, now controlled by the federal government as a result of their recent buyouts, will defend the executives in any proceedings arising out of their employment with the company. While the government likely had leverage to re-negotiate these terms prior to their buyout, it appears that any such leverage has now evaporated and a refusal to honor the 'duty to defend' term would likely result in a breach of contract claim being brought against the government.



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