If you're looking for a sign of how impossibly strong the housing-mortgage complex is, check out this morning's New York Times story on Dick Syron, the embattled boss of Freddie Mac. The story related the allegations of "more than two dozen current and former high-ranking executives" who claim that Syron ignored warnings about the financial health of Freddie as far back as 2004.
What caught our eye, however, was Syron's defense. He says that even if he wanted to rein in the mortgage boom, fed in large part by the operations of the GSE he was running, he could not have. Pressure from shareholders, regulators and lawmakers forced his hand, keeping the mortgage spigot open.
"He said we couldn't afford to say no to anyone," Syron's former chief risk officer tells the Times.
Keep this in mind whenever anyone says that we're going to effectively regulate Freddie Mac and Fannie Mae in the future. These pressures haven't gone away. In fact, they may now be stronger than ever. Just this morning former Fannie Mae boss Franklin Raines all but declared victory for the cause of cheap-money mortgages.
At Freddie Mac, Chief Discarded Warning Signs [New York Times]
Posted by guest, Aug 05, 2008 9:34AM
You left off the Banking wing of that complex.