Former Fannie Officials Testify to Congress

WASHINGTON, DC-After listening last week to the explanations and–in some cases–mea culpas from former Federal Reserve Bank chairman Alan Greenspan and former Citigroup executives Charles Prince and Robert Rubin about their roles in the financial system’s meltdown, the Financial Crisis Inquiry Commission turned its attention to formerexecutives at Fannie Mae on Friday.

Unlike Citigroup and the Federal Reserve Bank, however, Fannie Mae hasyet to show any sign of improvement from the collapse of the mortgagesecurities markets, which made the testimony all the more significantas Congress sets about fixing the GSEs’ own house.

Daniel H. Mudd, Fannie Mae chief executive from 2004 to 2008, told thepanel that it was Fannie’s conflicting mission–make a profit butalso increase the supply of affordable housing–that drove it toinvest so heavily in subprime mortgages. Also, he said, the depth ofthe financial crisis and its sudden turns, made it impossible foranyone to foresee how bad things could get–sentiments also voiced bythe former Citigroup executives the day before.