Skip to comments.Former GSE chiefs scolded for careless lending
Posted on 12/09/2008 9:35:49 AM PST by NormsRevenge
WASHINGTON (Reuters) Four men who led mortgage finance giants Fannie Mae and (FNM.P) Freddie Mac (FRE.P) were called before a U.S. House of Representatives panel on Tuesday and chided for making irresponsible loans that fueled a housing crisis and helped push the economy into recession.
"The CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies. Their actions could cost taxpayers hundreds of billions of dollars," House Oversight and Government Reform Committee Chairman Rep. Henry Waxman said.
The committee reviewed over 400,000 documents, many that passed through the hands of Daniel Mudd, the former chief executive officer of Fannie Mae, and Richard Syron, the former chief of Freddie Mac, ... .
The Treasury Department effectively took control of the companies as they faced collapse after recording billions of dollars of losses and as investor confidence evaporated. In the previous four or five years, the companies expanded their holdings of risky loans that eventually poisoned the companies' books.
While Fannie Mae and Freddie Mac were among the most conservative in their underwriting standards, Waxman pointed to documents that showed company executives eventually chose to follow Wall Street and extend high-risk loans.
All of the former executives said the companies were, in part, victims of government charters that banned Fannie Mae and Freddie Mac from making investments in anything but mortgages.
"Fannie Mae did not cause the current crisis," said Franklin Raines, who left Fannie Mae under the cloud of an accounting scandal in 2004.
Fannie Mae and Freddie Mac were not leaders but followed other market players into a dangerously risky market, he said.
"By the time the (government-sponsored enterprise) began its most significant investments in riskier loans in 2005, the roots of the present crisis had long taken hold," he told lawmakers.
(Excerpt) Read more at news.yahoo.com ...
Cover-up in progress.
Congre$$ional hearings in session.
Nothing to see here.
The top execs of enron and Worldcomm got long prison sentences for far far less. This is a joke.
“The CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies. Their actions could cost taxpayers hundreds of billions of dollars,” House Oversight and Government Reform Committee Chairman Rep. Henry Waxman said.
Pray tell, Mr. Waxman. Where was the oversight?
funny how nobody’s calling for these hotshots to be fired ass a precondition of receiving federal monies, only GM. guess GM should have given Dodd a new corvette to put in his countrywide financed garage.
BIG BRASS BA11S!
Fannie and Freddie simply complied under the community reinvestment act (ptui) signed into law by peanut head and strengthened by slick willie. The whole reason a loan is sub-prime is the company accepts more risk that the loan will be paid off. Add to that companies attempting to generate capital by selling blocks of sub-prime loans to other companies, and the whole thing was bound to collapse.
By the way, the CRA, a democrat program.
Romanian Term Limits
They were too busy “overseeing” baseball players.
In Iran they would be flogged then thrown in jail...but then again, Barney may like that sort of thing
I love how the Community Reinvestment Act is never mentioned when the discussion of the mortgage crisis arises.
“I love how the Community Reinvestment Act is never mentioned when the discussion of the mortgage crisis arises.”
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was there any mention of Acorn people threatening loan agents if they didnt make these “irresponsible loans”?
Was there any mention of one Odumbo suing Citibank for failing to comply with the CRA?
What a frickin farce!