Freddie CEO: I Was Paying Attention to Credit Risk
Richard Syron, chairman and CEO of Freddie Mac, defended his handling of the troubled mortgage giant, saying that the housing market "deteriorated even more than we expected."
In a live interview on CNBC, Syron also disputed a New York Times article that said Syron rejected internal warnings about Freddie Mac's financing of risky mortgages, saying "I was raising questions about it all the time."
"If you ask me what went wrong," he said, "the market in housing deteriorated even more than we expected."
Earlier Wednesday, Freddie Mac posted its fourth straight quarterly loss as it braced for a prolonged housing crisis by setting aside twice as much money for bad loans and setting plans to slash its dividend by at least 80 percent.
The worse-than-expected results come just three weeks after U.S. authorities orchestrated a sweeping effort to prop up Freddie , the second-biggest provider of U.S. residential mortgage funding, and its bigger rival, Fannie Mae .
In the interview, Syron said he didn't think Freddie or Fannie would need to be bailed out by the Treasury despite major losses from soured mortgage loans.
"We're in a very bad patch, undeniably," Syron said. "As (the housing market) improves, we'll be in very good shape going forward."
See the Full CNBC Interview with Freddie Mac CEO Richard Syron:
Syron rebutted the Times article that contended he could have protected the company from some of the financial crises now engulfing it.
The Times, citing executives within the company, said that Syron received a memo in 2004 from Freddie Mac’s chief risk officer warning him that the firm was financing questionable loans that threatened its financial health.
Syron refused to consider possibilities for reducing Freddie Mac’s risks, the risk officer told the Times, and over the next three years, Freddie Mac continued buying riskier loans.
When asked about the article, Syron said: "I don't think it was at all correct to say I wasn't paying attention to credit risk. I was raising questions about it all the time."
"I suppose we could've said we're just going to put the car in the garage," he added. "That essentially we could've gone out of business for two or three years until things get better. That was not an option that was available to me."
--Reuters and the New York Times contributed to this report.