The stock market remains volatile and at levels nearly a third below the record highs of 2007. The larger economy is threatened by dysfunctional credit markets, and the federal government continues to commit billions of taxpayer dollars to measures designed to avoid a deep recession.

In the meantime, taxpayers are learning more about how the current financial crisis came about.

There is a general understanding that today's trouble is rooted in subprime mortgages and greed — on Wall Street and on other streets. There also is a growing awareness of the role of complicated financial instruments cooked up by Wall Street wizards, broadly known as derivatives, which were sold globally and were highly profitable, until the sudden collapse began earlier this year.

Most people also understand that the twin federal mortgage giants, known as Fannie Mae and Freddie Mac, had a central role in feeding the crisis by encouraging the sale of mortgages to people who were unlikely to repay them. In many cases, the loans were for amounts that exceeded the actual value of the house being bought. In some cases, the loans were based on false or missing income information.

Fannie Mae and Freddie Mac were key players in fueling the real estate bubble. The government-sponsored agencies bought up millions of marginal loans, and by doing so, encouraged banks and mortgage brokers to sell even more iffy loans, now at the heart of the banking crisis.

Built on the belief that housing prices would continue to climb forever, the mortgage giants helped build a classic house of cards, which came crashing down with the first tremors in the real estate market.

Most people also know that Fannie Mae and Freddie Mac had staunch supporters in Congress who rebuffed efforts to rein in the purchasing of risky loans and increase regulatory oversight of the agencies.

Prominent politicians, such as Rep. Barney Frank, D-Mass., now look foolish, at best, for rejecting increased oversight. Frank looks especially suspect for his 2003 resistance to Republican efforts to tighten lending regulations when he said, "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis."

Fannie Mae and Freddie Mac were well-known for their lobbying efforts to protect their turf and keep meddling federal regulators from spoiling the good times, when the chief executive officers were taking home multimillion-dollar salaries and bonuses.

Politics, not surprisingly, was a factor at Fannie Mae and Freddie Mac, with Democrats supporting the status quo and a group of Republicans pushing for more regulation.

To resist the GOP-led efforts at increased regulation, it was reported last week that Fannie Mae and Freddie Mac paid $2 million to a Republican lobbying firm to kill a measure sponsored by Sen. Chuck Hagel, R-Neb., that would have increased government regulatory control over the mortgage companies.

The lobbying money was directed to peel away Republican votes, crucial to balance the predictable Democratic votes solidly against any added governmental oversight.

In addition to overt lobbying, in which Fannie Mae and Freddie Mac directed money to their congressional supporters, the new evidence reveals a darker lobbying effort. The money for the covert lobbying was designed to undermine support for Hagel's new regulatory effort, by getting prominent constituents to contact their Republican senators with the message to defeat the Hagel bill.

Hagel and the cosponsors of his legislation, which included Sen. John McCain, wrote a letter in 2005 asking then-Senate Majority Leader Bill Frist, R-Tenn., to allow a vote. Those pleadings were unsuccessful, but the contents of the letter are worth noting.

The letter said, "If effective regulatory reform legislation is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole."

It now turns out that the GOP senators who failed to support the bill backed by Hagel, McCain and other senators, were influenced by the subversive lobbying paid for by Fannie Mae and Freddie Mac, but carefully designed to be untraceable to them.

The more that is revealed about Fannie Mae and Freddie Mac, the more disturbing it is. Therefore, it is encouraging to learn that federal prosecutors are investigating the accounting, corporate governance and disclosure practices at Fannie Mae and Freddie Mac.

These creations of the federal government, which also operated as private companies, appear to not only have contributed greatly to the current financial crisis, but they also were actively — and secretly — involved in preventing reasonable government oversight.

Among the many contributors to this financial crisis, the role of Fannie Mae, Freddie Mac and their friends in Congress must be exposed — and prosecuted.