Yesterday four former Fannie Mae and Freddie Mac CEO’s appeared before Congress to testify about what went wrong at these two companies before they were unceremoniously taken over by Uncle Sam. 

At the hearing I asked these former executives some pointed questions about their refusal to listen to concerns about Fannie and Freddie’s very risky lending practices.   And I asked them how they could justify their strident efforts to keep their regulators (HUD and OFHEO) not only at arm’s length, but essentially powerless to enforce the law.

Here are a few relevant excerpts from my questions and comments at the congressional hearings:

Rep. Virginia Foxx: ”How do we test for ethics?  How do we test for a sense of vision? How do we test for people who will look at the full spectrum of issues, not just always looking for the sunny side of the street?

“We need people who will understand how to deal with crisis.  You’re saying it’s unfair to ask you to work in situations of crisis.  What in the world were you getting paid millions of dollars to do? Simply ride the gravy train and always be there when things were good?

“For heaven’s sake, did you not have any sense that anything could ever go wrong under your watch and that you weren’t responsible for that? 

“You have exhibited no sense of accountability for your actions here.  None.  And that is disturbing to me and the American people.”

You’ll recall that Treasury Secretary Paulson helped the feds take over these two massive lenders earlier this year, pledging $100 billion of your tax dollars for each.  Why?  According to testimony given (PDF) at yesterday’s hearing Fannie and Freddie took on more than $4.6 trillion in risky loans.  In total the two are responsible for 34 percent of all subprime loans and 60 percent of Alt-A loans according to this testimony. 

Taking on this kind of risk eventually brought both of the lenders down.  And now every tax-paying American is footing the bill.