An inspector general report examined legal fees being paid on behalf of former senior executives of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. One way that the two government-controlled enterprises can cut back on legal expenses is to stay all litigation until they are out of conservatorship since neither will ever be in a position to pay such fees.

The report highlighted the case of three former executives of Fannie Mae — including its former chief executives officer, chief financial officer and controller — who are accused of engaging in practices to artificially inflate the company’s stock price.

The three settled with the Federal Housing Finance Agency’s predecessor, the Office of Federal Housing Enterprise Oversight, in August 2008 for a combined $31 million.

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