The two mortgage giants Freddie Mac and Fannie Mae — seized by the government September 7 before they went completely bankrupt, at a potential cost to taxpayers of more than $25 billion — have been in obvious trouble for much of the past five years — with criminal investigations, accounting scandals, firings, resignations, huge losses and warnings from the Federal Reserve that their huge portfolio of mortgage securities posed a risk to the overall financial system.

But prior to this year, the watchdogs at ABC, CBS and NBC found time for only 10 stories on the financial health and management of Fannie Mae and Freddie Mac. A review of the three networks’ morning and evening news programs from January 1, 2003 through December 31, 2007 found nine anchor-read items or brief references to the companies troubles, plus one in-depth report by CBS’s Anthony Mason on the May 23, 2006 Evening News, after Fannie Mae was fined $400 million for accounting fraud.

It’s not that the networks eschew business news. A 2005 report from the MRC’s Business and Media Institute found heavy coverage of the scandal surrounding Enron, but no interest in the growing scandal surrounding Fannie Mae: “A LexisNexis search of ABC, CBS, NBC, and CNN on the term ‘Enron’ from the nine months around when the story first broke – Oct. 1, 2001, to July 1, 2002, produced 3,017 hits....A similar LexisNexis search was performed for the term ‘Fannie Mae’ for those same media, from June 1, 2004, to March 1, 2005, again during the time the story was breaking. This search discovered a paltry 37 matches.”

But the networks should (presumably) be more interested in monitoring these mortgage behemoths, since they’re not normal private companies but rather Government Sponsored Entities (GSEs) chartered by Congress to promote the specific cause of promoting home ownership. This special status, along with the presumption that taxpayers would bail out the firms if they got into trouble, amounts to an implicit federal subsidy that the Federal Reserve in 2003 calculated was worth between $119 and $164 billion a year.

Writing in Tuesday’s Wall Street Journal, Charles Calomiris and Peter Wallison of the American Enterprise Institute explained how these two GSEs — plus members of Congress who refused to hold them accountable — are “largely to blame for our current mess.” An excerpt:

Many monumental errors and misjudgments contributed to the acute financial turmoil in which we now find ourselves. Nevertheless, the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) -- and their sponsors in Washington -- are largely to blame for our current mess.

How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse....

In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.

Now the Democrats are blaming the financial crisis on "deregulation." This is a canard. There has indeed been deregulation in our economy -- in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few -- and this has produced much innovation and lower consumer prices....

If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.

Here’s some of what the networks reported/ignored as the problems grew:

■ June 11, 2003: Only NBC Nightly News anchor Tom Brokaw mentioned how “federal prosecutors have opened a criminal investigation into alleged misconduct among top officers of the home mortgage giant Freddie Mac. This just two days after its president was fired and the CEO and CFO resigned, amid disclosures the company is being investigated for accounting fraud.” CBS and ABC were silent.

■ December 11, 2003: The New York Times reported: “Federal regulators released a scathing report Wednesday on the corporate culture that fostered improper accounting at Freddie Mac, the same day that they announced that the company had agreed to pay a $125 million penalty and to take measures to prevent future misconduct.” Not a peep on ABC, CBS and NBC.

■ May 7, 2004: The Washington Post reported: “Fannie Mae's regulator said yesterday that the federally chartered mortgage funding giant improperly accounted for the declining values of two types of securities in its portfolio, though it did not say how big those unreported losses could be.” No coverage from the networks.

■ December 22, 2004: CBS’s The Early Show carried a one-sentence report: “Fannie Mae has fired its CEO, Franklin Raines, over accounting problems at the mortgage giant.” Raines was Bill Clinton’s Director of the Office of Management and Budget, a major Democratic figure, but his party connections were not mentioned.

Six days later, the Early Show offered a follow-up: “And Fannie Mae’s ousted CEO will be getting a massive payoff, if federal regulators don’t block it. Franklin Raines could get more than $114,000 a month for life, plus deferred compensation. The mortgage giant’s board of directors forced him out last week because of an accounting scandal.” The other networks mentioned none of this.

■ May 23,2006: After an investigation by the Office of Federal Housing Enterprise Oversight, Fannie Mae agreed to pay $400 million in fines for “cooking the books and deceiving investors,” as CBS Evening News anchor Bob Schieffer described it. Reporter Anthony Mason presented the only in-depth report on Fannie Mae’s bad business:

When Franklin Raines strode into Fannie Mae’s corporate boardroom in 1998 to take over as CEO, he was met with applause. But a scathing government report out today says Raines presided over an arrogant and unethical corporate culture....The report says between 1998 and 2003, Fannie Mae overstated earnings by more than $10 billion, manipulating them to maximize bonuses for company executives, including Raines. He received $90 million in bonuses during those years, more than $52 million of which was tied to hitting earnings targets.

That morning, NBC’s Ann Curry read a brief item on the Today show announcing that the report on Fannie Mae would be released later that day, while ABC skipped the development completely. Neither NBC nor CBS mentioned Raines’ Democratic affiliation.

■ On March 7, 2007, ABC’s World News was the only program to mention (albeit briefly) a warning from the Federal Reserve Chairman Ben Bernanke: “Bernanke urged Congress today to tighten regulations on the giant mortgage companies Fannie Mae and Freddie Mac.”

That morning’s Washington Post elaborated on Bernanke’s warning, which now seems all-too prescient:

Federal Reserve Chairman Ben S. Bernanke said yesterday that the scale of Fannie Mae's and Freddie Mac's mortgage investments could pose risks to the financial system, and he called for them to limit their holdings almost exclusively to loans for affordable housing.

Bernanke's proposal would sharply curtail the growth and profits of the government-chartered mortgage-funding companies, and it would force them to focus on investments that have, as he described it, "a clear and measurable public benefit."

Congressional efforts to overhaul regulation of Fannie Mae and Freddie Mac have been moving in a different direction....

Fannie Mae and Freddie Mac have $1.4 trillion of mortgage-related investments, which are sensitive to movements in interest rates and require extensive hedging to reduce risk. The companies have debts and outstanding-credit guarantees of $5.2 trillion, exceeding the U.S. government's $4.9 trillion of publicly held debt, Bernanke said....

According to the Fed, the perception that the government stands behind Fannie Mae and Freddie Mac enables them to borrow at low interest rates and buy assets with higher returns in a kind of perpetual-profit machine. That gives them an incentive to expand their holdings, Bernanke said.

In his first speech on Fannie Mae and Freddie Mac, Bernanke echoed longstanding Fed concerns. Although the Fed has concluded that they do not seem to pose an immediate threat, "their portfolios represent a potentially significant source of systemic risk," Bernanke said.

■ November 7, 2007: In a round-up of market action for the CBS Evening News, reporter Anthony Mason briefly mentioned that “the New York state attorney general [Andrew Cuomo] has subpoenaed the government-backed lenders Fannie Mae and Freddie Mac in his investigation into conflicts of interest in the mortgage industry.”

The next morning on NBC’s Today, CNBC’s Jim Cramer railed against Cuomo, calling him “a communist” who was “making it so the very institutions we need right to provide money for people are gun-shy....If you’re trying to buy a home right now, the last thing you want is Cuomo attacking the people, the companies, that make money available for you to buy a house.”

■ November 20, 2007: NBC Nightly News anchor Brian Williams briefly mentioned that “Freddie Mac, America’s second biggest buyer and backer of home loans, said today it lost $2 billion in the third quarter of this year.”

Until this summer’s collapse, the networks offered extremely little coverage this year, too, although ABC’s Good Morning America on May 6 noted in passing how Bernanke had once again “urged Congress to reform mortgage financiers Fannie Mae and Freddie Mac.”

The paltry amount of coverage virtually ensured that the public would remain largely in the dark about the growing troubles at these GSEs, with no clamoring for the politicians to fix the mess they’d helped create. The media like to consider themselves the public’s self-appointed watchdogs, monitoring the corridors of power for transgressions and abuse. When it came to Fannie and Freddie, the network watchdogs were asleep at the switch.

—Rich Noyes is Research Director at the Media Research Center.