Fannie Mae did not cause the crisis in the American housing market

US mortgage giant Fannie Mae did not cause the crisis in the American housing market, its former boss has told a key Congressional committee.

By the time Fannie Mae had started its riskier loan investments in 2005, “the roots of the present crisis had long taken hold,” said Franklin Raines.

Mr Raines’ comments came in written testimony to the House Oversight and Government Reform Committee.

Fannie Mae and sister firm Freddie Mac had to be bailed out in September.

They were rescued by the government in a move that could cost the US taxpayer $200bn (£137bn).

Giant losses

The two firms are now being administered by the Federal Housing Finance Agency until their long-term future is decided by President-elect Barak Obama’s new administration in the New Year.