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#1170354 --- 04/11/10 03:53 AM Fannie Mae Executives to Face Special Panel
HarleyBobT Offline
Senior Member

Registered: 08/22/08
Posts: 5106
Loc: Walloon Freedom Fighter
Former Fannie Mae Executives to Face Special Panel
Friday, April 09, 2010
By Alan Zibel, Associated Press

Washington (AP) - 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.
Kristin Davis for NY State Governor,a hard working girl and the hottest candidate NY has ever seen.

#1170357 --- 04/11/10 04:00 AM Re: Fannie Mae Executives to Face Special Panel [Re: HarleyBobT]
Ayuveda Offline
Senior Member

Registered: 04/05/10
Posts: 6367
Loc: Imagine

Republican National Committee laundered at least 250,000 in Fannie Mae donations.

Another ride on the scandal machine.
Sometimes, tear gas can make you see better.
-graffiti in Athens

#1170418 --- 04/11/10 12:59 PM Re: Fannie Mae Executives to Face Special Panel [Re: HarleyBobT]
Al Kida Offline
Senior Member

Registered: 11/14/06
Posts: 3102
Originally Posted By: HarleyBobT
They argue that the two companies promoted homeownership to people who ultimately couldn't afford it.

Now government promoting healthcare for peoples that can not afford it!!!

This mean healthcare bubble next???