A recent The New York Times story, “Adding Up the Government’s Legal Bills for Fannie and Freddie,” reports that the legal bills from former executives at Fannie Mae and Freddie Mac continue to pile up for the government.  A decision last week by Judge Richard J. Leon of the U.S. District Court for the District of Columbia to dismiss a shareholder lawsuit against former Fannie Mae CEO Franklin D. Raines may provide a bit of relief from the legal bills.  But more recent cases will require the government to pay to defend executive accused of misleading investors about subprime mortgages on the companies’ books that all likelihood will take years to resolve.

Like most public companies, Frannie Mae had a broad indemnification policy requiring it to advance the legal fees for executives accused of misconduct based on their work for it.  When the government took over the company in September 2008, it affirmed that position and has continued to pay for the lawyers.

A report (pdf) issued in February by the inspector general of the Federal Housing Finance Administration, which oversees Fannie Mae and Freddie Mac, estimated that the legal fees paid on behalf of Mr. Raines and other executives totaled $97 million to that point, of which the government had paid approximately $37 million.  Judge Leon has not yet decided whether to dismiss the case against the two other Frannie Mae executives.  In addition, plaintiffs can appeal his decision on Mr. Raines, so the legal bills can certainly continue to add up.