Freddie CEO Dismissed Bad Omens for Years

Execs charge Syron was warned of disaster
By Jason Farago,  Newser Staff
Posted Aug 5, 2008 4:34 AM CDT
Richard Syron, chairman and CEO of Freddie Mac, listens to his introduction before talking about the subprime lending crisis and its effect on the housing market.   (AP Photo/Stephan Savoia)
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(Newser) – The CEO of Freddie Mac disregarded several warnings from inside the company that the mortgage giant faced imminent disaster. More than two dozen current and former high-ranking employees told the New York Times that Richard Syron dismissed repeated recommendations from as early as 2004 to limit its exposure to bad loans, which now threaten to saddle taxpayers with a multibillion-dollar bailout.

While many in the company warned that taking on so many risky loans endangered both the company and the country, the institution accelerated its buying spree. And despite insistence that Syron authorize greater capital cushioning, cash on hand declined instead. Syron contended in an interview that his hands were tied by the conflicting demands of shareholders and Congress. But as one exec said, "It’s not acceptable to blame those pressures for making bad choices."