News Flash: Fannie Mae Knew it was Screwing Up

And let’s not forget that Fannie Mae and Freddie Mac are essentially government agencies, and contributed greatly to the financial crisis: Fannie Mae Internal E-Mail: Warnings Ignored:

The House Oversight and Government Reform Committee held a hearing Tuesday to explore the collapse of mortgage finance giants Fannie Mae and Freddie Mac. And, as usual, Chairman Henry Waxman, a California Democrat, made sure to have plenty of unflattering documents on hand.

From Waxman’s prepared statement:

On October 28, 2006, Fannie’s chief risk officer sent an E-mail to company CEO Daniel Mudd warning about a “serious problem” at the company. He wrote: “There is a pattern emerging of inadequate regard for the control process.”

Read the email. It’s telling.

More here:

The House Oversight and Government Reform Committee held a hearing Tuesday to explore the collapse of mortgage finance giants Fannie Mae and Freddie Mac. And, as usual, Chairman Henry Waxman, a California Democrat, made sure to have plenty of unflattering documents on hand.

From Waxman’s prepared statement:

In another E-mail on July 16, 2007, the same risk officer wrote to Mr. Mudd again, this time complaining that the board of directors had been told falsely that the “we have the will and the money to change our culture and support taking more credit risk.” The risk officer wrote:

I have been saying that we are not even close to having proper control processes for credit, market, and operational risk. I get a 16 percent budget cut. Do I look so stupid?

But these warnings were routinely disregarded.

And I’m sure there will be plenty more where that came from.

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