Freddie Mac Chief Ignored Warnings Of Bad Underwriting
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Is there any surprise that Freddie Mac chief Richard Syron ignored warnings that the mortgage underwriting standards were poor and that they under capitalized the loans on the books?
Didn’t think so, especially when he was taking huge bonuses placing bets with taxpayer’s and shareholder’s money.
Ugh…
In an interview with the paper, Freddie Mac’s former chief risk officer, David Andrukonis, recalled telling Syron in mid-2004 that the company was buying bad loans that would likely pose an enormous financial and reputational risk to the company and the country.
Syron received a memo stating that the firm’s underwriting standards were becoming shoddier and that the company was becoming exposed to losses, the paper said, citing Andrukonis and two others familiar with the document.
But Syron refused to consider possibilities for reducing Freddie Mac’s risks, the paper cited Andrukonis as saying.
“He said we couldn’t afford to say no to anyone,” the paper quoted Andrukonis as saying. Over the next three years, Freddie Mac continued buying riskier loans, the paper said. via msnbc.com.
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