Internal Warnings Sounded on Loans At Fannie, Freddie: Executives Were Told of Subprime Risk

The Washington Post reports:

Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.

At Fannie Mae, top executives were told it was necessary to develop "underground" efforts to buy subprime mortgages because of competitive pressures, although there were growing risks and borrowers often didn't understand the terms of the loans, documents show.

The House Committee on Oversight and Government Reform, which has the documents, is holding a hearing today to discuss Fannie and Freddie's downfall. The companies were seized by the government three months ago after nearly collapsing in the wake of billions of dollars of losses on mortgages.

No word yet from Rahm Emanuel on the Freddie Mac side to this story.Also,no word yet on whether David Gregory (of MSNBC) will be interview his wife on the Fannie Mae side to this story.