>WASHINGTON — Executives at Fannie Mae and Freddie Mac clashed over the adequacy of risk controls for several years as the two giant mortgage companies increased their purchases of dicey loans, according to emails released Tuesday at a congressional hearing.
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 “has one of the weakest control processes I ever witness (sic) in my career,” Enrico Dallavecchia, then chief risk officer of the company, wrote in a July 2007 email to Michael Williams, chief operating officer. See the complete WSJ story. . .