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Archive for Wednesday, December 10, 2008

Former mortgage execs blasted

December 10, 2008

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— Three months after the government seized control of Fannie Mae and Freddie Mac, lawmakers on Tuesday blamed former top executives at the mortgage giants for fueling the financial market turmoil that has dragged the country into a recession.

And the housing fallout continues. The National Association of Realtors’ index of pending U.S. home sales beat expectations in October — but deeply discounted foreclosures and distressed sales accounted for nearly half the deals.

In Congress, a special panel charged with overseeing the government’s $700 billion bailout of the financial sector challenged the Bush administration’s spending decisions and said Treasury officials needed to explain their reluctance to use the money to reduce the number of foreclosures, according to a draft report from the panel.

On Wall Street, stocks fell after a two-day rally as downbeat corporate news reminded investors that the economy’s troubles won’t soon ease. The Dow Jones industrials fell nearly 243 points, while broader indexes showed more moderate declines.

Seeking the safety of government securities, investors drove demand for ultra-safe Treasury bills so high Tuesday that they were willing to earn no interest on their investments at a Treasury Department auction. Interest rates on four-week Treasury bills slid to zero from 0.04 percent a week earlier.

At the same time, Congress and the White House pushed to clear the final obstacles to a $15 billion bailout of the auto industry.

Internal e-mails and other documents released by the House Oversight and Government Reform Committee show that former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron disregarded recommendations that they avoid riskier types of loans.

“Their irresponsible decisions are now costing the taxpayers billions of dollars,” said Rep. Henry Waxman, D-Calif., chairman of the committee, which reviewed nearly 400,000 internal documents from Fannie and Freddie.

Comments

jmadison 5 years, 4 months ago

Waxman should question Sen Dodd and Rep Frank under oath for their involvement in the mortgage meltdown.

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