Mudd Covers Fannie Mae Record

Today Barney Frank's House Financial Services Committee will hear ideas from across the political spectrum about what the next-generation Fannie Mae and Freddie Mac should – and should not -- be able to do.

Congress had better pay attention to ex-Fannie CEO Daniel Mudd, who with colleague Robert Levin went before the Financial Crisis Inquiry Commission late last week to give his account of why Fannie Mae ended up as good as wiped out, and in the hands of the U.S. government.

Fannie's losses are expected to cost U.S. taxpayers more than $300 billion.

"In hindsight, less credit exposure to new homeowners, non-traditional products and regions of the country in economic downturn might have reduced losses," Mudd told the bipartisan panel. In other words, mandates from Congress and the U.S. Department of Housing and Urban Development to make credit available to low- and moderate-income borrowers ended up costing Fannie Mae dearly. That's the same conclusion Alan Greenspan came to in testimony to the commission earlier last week.