The former chairman and chief executive officer of Wells Fargo & Co. left no doubt about who he believes was responsible for the global financial crisis that brought down some the biggest financial players and sparked the Great Recession.
Richard Kovacevich was the chairman of the San Francisco-based financial services from 2001 until 2010, while he served as president from 1998 until 2005.
Among the parties who were behind the crisis were credit rating agencies, investments bankers and mortgage brokers. One of the biggest culprits, according to Kovacevich, were Fannie Mae and Freddie Mac.
“Over 70 percent of all of these subprime mortgages were guaranteed — subprime mortgages, Alt-A, exotic mortgages — by Freddie, Fannie or another government agency,” he said in an interview on CNBC. “There is no way that anybody would have bought this stuff if it wasn’t guaranteed by the implied full faith of the government. Seventy percent.
“If we would not have had Fannie and Freddie, this crisis would never have occurred.”
Kovacevich also attributed some of the blame to the Securities and Exchange Commission and state regulators that were responsible for mortgage brokers.
