Fannie and Freddie CEOs thrashed

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By Richard C. Gross, THE WASHINGTON TIMES

Members of a House watchdog panel verbally whipped four former chief executive officers of Fannie Mae and Freddie Mac Tuesday, plumbing documents to show they ignored warnings that investments in risky home mortgage loans could lead to financial disaster.

"Taking these risks proved tremendously lucrative for the Fannie and Freddie CEO's," said Henry A. Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee. "They made over $30 million between 2003 and 2007. But their irresponsible decisions are now costing the taxpayers billions of dollars."

Yet "nobody takes responsibility for anything," Rep. Mark Souder, R-Ind., said later at a hearing at which House members got angrier, their voices louder as it progressed.

"You're not being held accountable," complained Rep. Christopher Shays, R-Conn.

Mr. Waxman convened the hearing to determine why the two mortgage giants collapsed in September, when the federal government bailed them out with $100 billion each and took them over. He drew on 400,000 documents and e-mails that Fannie and Freddie sent to the committee at its request.

The companies have lost nearly $12 billion so far this year, Mr. Waxman said. Together, they own or guarantee about $11.5 trillion in home loan debt nationwide. They traditionally backed 30-year fixed rate mortgages, among the safest of loans, before standards were lowered.

All four of the former CEO's sat contritely at a table before the committee members, trying to respond politely as the questioning got more intense, the tone more prosecutorial, the demands for direct answers more insistent.

The scene was reminiscent of the recent appearances before other congressional panels of the current heads of Detroit's Big Three automakers. Members of Congress wanted to know why they needed $25 billion then $34 billion in taxpayer money to ensure their companies' survival. A compromise $15 billion proposal since has been made.

Indeed, it has been a season of public humiliation on Capitol Hill for the chiefs of some of the country's biggest corporate giants.

This time, the political whip was wielded in the dying days of the current Congress against a backdrop of what has been described as the worst U.S. financial crisis since the Great Depression, largely caused by the collapse of a years-long housing bubble.