Lawmakers Consider Fannie, Freddie Regulation

Trying to reassure regulation-minded lawmakers, top executives at the nation’s multibillion-dollar housing finance companies told Congress on Tuesday the firms are sound financially, even in the face of an economic downturn.

“No financial company in the world will give policymakers and investors more information about its financial condition than Fannie Mae does,” said J. Timothy Howard, Fannie Mae’s chief financial officer, in prepared testimony.

The assurances come at a crucial time. A key House member, Rep. Richard Baker (R-La.), is drafting legislation to toughen up regulation of these so-called government-sponsored enterprises (GSEs).

Baker vowed Tuesday to introduce legislation within the next two weeks to create a tough new bank-like regulator over GSEs.

Baker chairs the subcommittee of the powerful House Financial Services Committee that oversees GSEs, which held its first hearing on the matter.

At the hearing, House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) said a voluntary pact these firms entered last fall addressed many of the concerns Baker had raised.

Oxley asserted that expanding home ownership, a key role of Fannie Mae (ticker symbol: FNM) and Freddie Mac (FRE), should be the chief concern of his panel.

Critics of Fannie Mae and Freddie Mac, mostly mortgage banking industry competitors, maintain that these GSEs operate with an unfair advantage.

But supporters of Fannie Mae and Freddie Mac credit them for the record rate of U.S. home ownership, which has continued to rise over the last several years.

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Hanging Tough

Housing finance giants Fannie Mae and Freddie Mac are trying to assure Congress they can weather an economic downturn.

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Fannie Mae (top) and Freddie Mac (bottom), monthly closes and latest on the NYSE

Tuesday: $76.80, up $2.80

Tuesday: $61.15, up $1.15

Source: Bloomberg News