Both Fannie Mae and Freddie Mac were taken over by the government in early September to avoid their collapse amid the escalating global financial turmoil, sparked in part by the subprime crisis.

Henry Waxman, the House Oversight and Government Reform Chairman, said  said:  "Their own risk managers raised warning after warning about the dangers of investing heavily in the subprime and alternative mortgage market. But these warnings were ignored."

'Not accepting blame'

Speaking on Tuesday, Franklin Raines, former chief executive officer for Fannie Mae, told the committee that it was partly the fault of US regulators for not enforcing stricter rules on who could receive the loans.

Thousands lost their homes in the US
subprime mortgage crisis [GALLO/GETTY]
"It is remarkable that during the period that Fannie Mae substantially increased its exposure to credit risk its regulator made no visible effort to enforce any limits, he said.

Raines was removed from his role at Fannie Mae in 2004 after allegations of accounting irregularities.

The three other executives appearing on Tuesday were Raines' successor, Daniel Mudd, and former Freddie Mac chief executives Richard Syron and Leland Brendsel.

Darrell Issa, a congressman from California, told the four executives their testimony
showed they were "not accepting any blame for this at all".

"Your whole excuse for going to risky and unreasonable loans that are defaulting at an incredibly high rate is: 'Everyone is doing it. If we don't do it, we'll be
left out,'" he said.

The committee also released thousands of the companies' internal documents, including one to Syron from David Andrukonis, former chief enterprise risk officer, which warned executives the company was buying mortgages that appear "to target borrowers who would have trouble qualifying for a mortgage if their financial position were adequately disclosed," the Washington Post reported.

The US economy has been hit hard by the collapse of the housing market in 2006 and the related subprime mortgage implosion, in which banks and mortgage firms offered mortgages to customers who then found they could not longer afford to repay the loan.

Both Fannie Mae and Freddie Mac have been working with the government and the private sector to try to stem foreclosures in recent months.