Problem No. 1 at Freddie and Fannie – shareholders

With Freddie Mac CEO Richard F. Syron on the hot seat for not showing more due diligence over subprime loans, how familiar does something like this sound:

“This company has to answer to shareholders, to our regulator and to Congress, and those groups often demand completely contradictory things,” Mr. Syron said.

That boils the problems with Freddie Mac and Fannie Mae down to a nutshell.

Of course, there’s just a few things that needed to be added to the picture.

First, Syron has made more than $38 million in compensation since 2003 for his “troubles” in dealing with all this.

Second, other than Fed chairman Ben Bernanke and current Treasury chief Henry Paulson playing scolds on Freddie’s capitalization, Syron’s regulatory oversight has been toothless. And, that’s ignoring Bernanke’s predecessor, St. Alan of Greenspan, wanting to pump up the housing world.

Third, tis true that Congress wanted what St. Alan wanted, in spades.

Of course, Freddie is still clueless. Why else, in looking to replace Syron as CEO, would the name of Alan Schwartz, who headed Bear Stearns as it collapsed, be tops on the list?