The GSEs Knew They Were Taking On Higher Risks

The Wall Street Journal's James R. Hagerty tells us that the brass at Fannie Mae and Freddie Mac knew they were taking on risks. He writes, "The emails show that the two government-backed mortgage companies were aware they were taking on more risk as the housing bubble peaked. But the companies pressed ahead with efforts to regain market share they had lost to Wall Street investment banks. They did so by buying loans and securities that increased their exposure to subprime mortgages, for people with weak credit records, and Alt-A mortgages, which typically spare borrowers from having to document their income and assets."

Fannie went through three chief risk officers between 2004 and 2008. As the financial crisis approached they cut their spending on risk control.

Did Freddie fire David Andrukonis for opposing their getting into NINA (no income, no assets) mortgages?

It was not just about market share. They were trying to please their congressional allies, or should I call them their unindicted conspirators.