CEOs continue crisis inquiry hearings
A Detour sign is posted at the main entrance to the Freddie Mac headquarters in McLean, Va.
TEXT OF INTERVIEW
Bill Radke: The Financial Crisis Inquiry Commission continues its work today looking into what caused the meltdown and how to prevent another one. Marketplace's Amy Scott is following their work and she joins us live. Good morning, Amy.
Amy Scott: Good morning, Bill.
Radke: So getting grilled today are former executives from the mortgage giant Fannie Mae. Remind us how Fannie played into all this.
Scott: Well the company, along with Freddie Mac, has been blamed for helping inflate the housing bubble. They basically buy mortgages from lenders, repackage them into bonds and sell them onto investors.
And critics say that by lowering the standards for the loans they bought, they helped put people in homes who couldn't really afford it. Eventually, of course, Fannie and Freddie were seized by regulators back in the fall of 2008, and their rescue has cost taxpayers more than $120 billion so far.
Radke: And who is testifying today and what are we going to hear?
Scott: Well we're going to hear from Daniel Mudd, who was Fannie's CEO during the housing boom. E-mails have shown that he ignored warnings about taking on too many risky loans, so that could come again today -- he has said that the company was trying to stay competitive. We'll also hear from Fannie's former chief business officer, Robert Levin, and from two of the company's former regulators, and I expect they'll be asked, you know, why the government missed some of these signs.
Radke: Right. Marketplace's Amy Scott. Amy, thank you.
Scott: You're welcome.