At Freddie Mac, Chief Discarded Warning Signs

New York Times (08/05/08) P. A1; Duhigg, Charles
More than two dozen current and former high-ranking executives at Freddie Mac say CEO Richard Syron was warned that the mortgage finance giant was financing questionable loans, was exposed to losses and needed to expand its capital cushion. Former chief risk officer David Andrukonis said Syron received a memo in 2004 that said the company was buying bad loans that "would likely pose an enormous financial and reputational risk to the company and the country." However, Syron said he had few options, and Freddie Mac continued to buy risky loans over the next three years. Now President Bush has signed a bill that bails out Freddie Mac and Fannie Mae and gives the government more regulatory control over the companies.