Frannie and Freddie Were Warned

As a House committee prepares to hold hearings today on the downfall of Fannie Mae and Freddie Mac, The Washington Post has gotten it hands on some pretty interesting evidence. Documents show that both were warned internally hat they were pushing into risky markets. Fannie was warned that it was entering into an unsafe area of the mortgage market but it pushed forward because if it hadn't it would have been relegated to a "niche" player in the market, unable to "maintain relevance." At Freddie, risk officer David Andrukonis continually warned that the a new mortgage markets it was entering were extremely dangerous, writing that the company was buying mortgages that appear "to target borrowers who would have trouble qualifying for a mortgage if their financial position were adequately disclosed." He was consistently ignored until Freddie executive asked him to leave the company in 2005.