CEOs of Fannie, Freddie Blamed for Collapses

(From time to time, starting today, the Icahn Report will be publishing news of interest written by staff.)

The CEOs of mortgage giants Fannie Mae and Freddie Mac were warned repeatedly by their risk officers about the dangers of investing in subprime mortgages, but pushed ahead anyway into the strategy that ultimately caused their collapse, Rep. Henry Waxman charged at a House Committee on Oversight hearing on Tuesday. The two government-sponsored entities, which buy mortgages from banks and lenders, were seized by the government in September and given access to $200 billion in capital.

Rep. Henry Waxman, the outgoing head of the House Oversight Committee, said risk managers "raised warning after warning about dangers of investing heavily in subprime and the alternative mortgage market. But these warnings were ignored."; Waxman, whose committee obtained nearly 400,000 documents from both companies, also said Freddie fired its chief risk officer after he warned of the dangers of targeting borrowers who would have trouble qualifying for mortgages.

"The CEOs of Fannie and Freddie made reckless bets that led to the downfall of these companies," said Waxman. The strategy, he said, was "tremendously lucrative" for the CEOs, who took home over $30 million between 2003 and 2007. "Their irresponsible decisions are now costing the taxpayers billions of dollars," Waxman said. –D.H.

Comments

[Trent]

Mr. Icahn,

There is a significant lack of respect for our government leaders/representatives during these Capital Hill preceedings. Individuals consistently participate without adequate answers, data, governance information or a willingness to answer questions under oath.

Maybe this arrogant attitude is the underlying motive behind these corporate strategies, lack of risk management, accountability and direct disregard for their fellow Americans. The faith I have in the history of our Great Country to rise above turbulent times is the only strength that gives me hope.

I hope Mr. Icahn, that others will rise up and restore our Honor as a Republic if nothing else. Our country is looking like everything is for sale, expendable or a bargaining chip, even our Liberty Bell. What have we done? And what have we become?

Andrew Carnegie, Morgan, Gould, Rockefeller, etc. all saw the greater good to country by investing in infrastructure, education and prosperity. Who are these people we are dealing with and what is their personal vision for our great country? I am very disheartened but remain optimistic in the faith of the Flag and men mentioned above with the likes of Icahn, C. Schwab, Cuomo, etc. We must have immediate corporate restructuring, governance, transparency, individual investor representation exiting BK, accountability, Honor and Respect Restored.

Our government lacks a sense of urgency in this matter because they don't relate these economical/business issues with our National security. American Prosperity is National Security?

God Bless America and my Fellow Americans!

[Joe G.]

Congress is just as culpable. They consistently pushed banks to lend to less creditworthy individuals in historically discriminated populations. Now, the same people (including Barney Frank) chastise the same organizations for not recognizing the risks in complying with congressional will.

[Karen Booher]

As I have been stating all along - At Will Work Laws get people terminated as soon as they tell the truth. Until this law is abolished, we don't stand a chance in hell of preventing continued catastrophes!!!!!

Karen
Terminated the day after sending an address to the Board of a publicly traded company concerning inflated asset values.