SEC Fannie Mae Probe Said to Examine CEO’s Testimony to Congress

Bloomberg reports:

As the housing market deteriorated in April 2007, Fannie Mae Chief Executive Officer Daniel Mudd reported to Congress on his company’s health. The firm’s exposure to subprime loans, he told lawmakers, “remains minimal, less than 2.5 percent of our book.”

Within 18 months, U.S. regulators seized the government- sponsored mortgage firm and its smaller sibling, Freddie Mac, after losses on soured loans pushed them to the brink of insolvency. The two firms have drawn more than $150 billion in life support from the Treasury since then.

Mudd’s statements to Congress are being scrutinized as part of a Securities and Exchange Commission probe, according to a person briefed on the matter. Regulators may be examining what Mudd knew about the loans and how he defined subprime when he testified before the House Financial Services Committee.

The questions are part of a larger investigation into whether Washington-based Fannie Mae and Freddie Mac of McLean, Virginia, told investors enough about the risky loans they loaded into their portfolios as the credit crisis loomed, according to two other people with direct knowledge of the investigation.

Shouldn't Daniel Mudd be in jail by now?