Ex-Fannie Mae Executives to Face Special Panel

Friday, 09 Apr 2010 07:06 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

Two former top executives of Fannie Mae will face questions Friday about the government-created mortgage titan's role in fomenting the housing boom and its eventual bust.

Daniel Mudd, Fannie Mae's chief executive during the housing boom, and Robert Levin, the company's former chief business officer, are due to appear in the third day of hearings examining the roots of the financial crisis.

Both executives left Fannie Mae after it was seized by regulators in fall 2008. Also scheduled to appear are James Lockhart and Armando Falcon, both of whom headed up the federal regulator for Fannie Mae and Freddie Mac.

The inquiry is being held by the congressionally chartered Financial Crisis Inquiry Commission. Congress created the commission last year to examine the causes of the crisis. The panel's goal is to get an in-depth understanding of decisions that inflated the mortgage bubble and triggered a financial crisis that tipped the economy into the longest recession in 70 years. Its report is due Dec. 15.

Fannie and Freddie buy mortgages from lenders and package them into bonds that are resold to global investors. As the housing bubble burst, they were unable to raise enough money to stay afloat, and the government effectively nationalized them in September 2008. That has cost taxpayers about $126 billion so far.

The role of Fannie and Freddie in the mortgage crisis is hotly debated in Washington. Republicans say the two companies, with the government's encouragement, deserve most of the blame for inflating the housing bubble. They argue that the two companies promoted homeownership to people who ultimately couldn't afford it.

But Democrats say Wall Street players were the primary culprits behind shady lending practices that led to the mortgage bust. They argue that Fannie and Freddie only lowered their lending standards to be competitive.

That often-repeated debate isn't just a source of endless political squabbling. The eventual consensus on whether the government or the private sector is more to blame for the bust will reshape the mortgage industry in the coming years.

"This is a very significant intellectual debate with significant implications," said Mark Zandi, chief economist with Moody's Analytics.

The Obama administration has given virtually no details on its eventual plan to restructure the mortgage market. Lockhart previously said he was opposed to nationalizing Fannie and Freddie on a permanent basis. Mudd, by contrast, said the companies should be fully public or private.

For Mudd, it will be the second grilling on Capitol Hill about his actions as Fannie Mae's CEO. In December 2008, a House committee released e-mails showing that Mudd and former Freddie Mac CEO Richard Syron disregarded recommendations that the companies avoid riskier types of loans.

At the time, Mudd defended his actions. He said that with competitors entering the market, "we couldn't afford to make the bet" against riskier lending.

On Thursday, the panel scolded Robert Rubin, a former financial superstar once lionized for his global crisis-fighting prowess, over the mortgage-securities disaster at Citigroup Inc. when he was a top executive there.

Rubin, a former Treasury secretary in the Clinton administration, expressed regret. But he insisted he didn't know until late in the game, when the subprime mortgage crisis erupted in September 2007, about the $43 billion in high-risk mortgage securities on Citigroup's books.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved