The House Oversight and Government Reform Committee held a hearing Tuesday to explore the collapse of mortgage finance giants Fannie Mae and Freddie Mac. And, as usual, Chairman Henry Waxman, a California Democrat, made sure to have plenty of unflattering documents on hand.
From Waxman's prepared statement:
Warnings were routinely disregarded. In one 2007 presentation, the management of Fannie Mae told the board:
We want to go down the credit spectrum.... Subprime spreads have widened dramatically to their widest level in years. We do not feel there is much risk going down to AA and A.... We don't expect to take losses at AA and A level. Eventually, we want to go to BBB.... We want to move quickly while the opportunity is still there.
Taking these risks proved tremendously lucrative for the Fannie and Freddie CEOs. They made over $30 million between 2003 and 2007. But their irresponsible decisions are now costing the taxpayers billions of dollars.
Here's the presentation that Waxman is referring to: