And the report that launched it all …

Armando Falcon’s 2004 report to Congress about Fannie Mae’s failure to comply with GAAP (Generally Accepted Accounting Principles).  All 198 pages of it.  Here is a blurb from the opening summary:

“The matters detailed in this report are serious and raise concerns regarding the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise.”

Believe it or not, we were warned about the financial crisis …

… years before it happened.  Here is a news spot from 2008 showing clips from Congressional hearings in 2004 — fully four years before the housing bubble burst and the financial meltdown took place — in which lawmakers were warned that there were serious problems with Fannie Mae and Freddie Mac.

These hearings were prompted by a report from OFHEO (Office of Federal Housing Enterprise Oversight).  Armando Falcon, Jr. was the Director of OFHEO at the time, and he was eviscerated by a number of congressmen and women, who claimed that Fannie Mae and Freddie Mac were “sound,” and that Mr. Falcon was out to undermine affordable housing.  This was untrue, as this article from The Nation magazine points out.

Those attempting to push for stronger oversight of the GSE were ignored.  Mr. Falcon was asked to resign.  But his concerns were vindicated by the events four years later.