Juries are sometimes told that in the eyes of the law, all Americans are created equal. But if that’s the case, then why does the Securities and Exchange Commission’s treatment of former top Fannie and Freddie executives seem to be so much harsher than its treatment of Citigroup and its senior people for what appear to be similar infractions?

Recall that on Dec. 16, the SEC charged six former executives at mortgage giants Fannie Mae and Freddie Mac with fraud for not properly disclosing the companies’ exposure to risky mortgages. In Fannie’s case, the SEC alleges that former CEO Dan Mudd and two other executives made a series of “materially false and misleading public disclosures.” The SEC says, for instance, that at the end of 2006, Fannie didn’t include $43.3 billion of so-called expanded approval mortgages in its subprime exposure and $201 billion of mortgages with reduced documentation in its Alt-A exposure. In Freddie’s case, the SEC alleges that while former CEO Dick Syron and two other executives told investors it had “basically no” subprime exposure, they weren’t including $141 billion in loans (as of the end of 2006) that they internally described as “subprime” or “subprime like.”

There are some gray areas in the SEC’s case. Start with the fact that there is no single definition of what constitutes a subprime or Alt-A loan, or as Mudd said in a speech in the fall of 2007, “the vague, prosaic titles that pass for market data — ‘subprime,’ ‘Alt A,’ ‘A minus’ — mean different things to the beholders.” In Fannie’s 2006 10(k), Mudd noted that apart from what Fannie was defining as subprime or Alt-A, the company also had “certain products and loan attributes [that] are often associated with a greater degree of credit risk,” like loans with low FICO scores or high loan-to-value ratios. And in a letter to shareholders in 2006, Mudd noted that “to provide an alternative to risky subprime products, we have purchased or guaranteed more than $53 billion in Fannie Mae loan products with low down payments, flexible amortization schedules, and other features.” These are the very holdings that the SEC says should have been disclosed as subprime exposure.

The SEC’s case on the Alt-A mortgages is equally tricky. As blogger David Fiderer points out, “reduced documentation” can refer to a loan for which the borrower proves his income with a W-2 for last year in addition to a 1040 for the previous year. Or “reduced documentation” can refer to a “stated income/stated asset” loan, otherwise known as a liar loan.” As of September 2008, the default rate on the loans that the SEC says Fannie should have labeled Alt-A was less than a third of the default rate on those Fannie did call Alt-A. In other words, you could argue that if Fannie had mixed those two groups of loans together, thereby lowering the reported default rate, the company could have been criticized — or possibly even sued — for making the default rate on its Alt-A loans look artificially low.

Be that as it may, the SEC, which has been under fire for not being aggressive enough, brought its charges. “Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, director of the SEC’s Enforcement Division, in the press release. “These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans … all individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”