Freddie Mac, Fannie Mae Bill in Senate

Three Republican senators introduced a bill Thursday to place regulation of Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing, in the Treasury Department.

“The success of these organizations has a direct effect on the stability of the American economy,” Sen. Charles Hagel (R-Neb.), one of the sponsors of the bill, said. “The new regulator in the Treasury Department would be better equipped to oversee these large financial institutions,” Hagel said.

Sens. Elizabeth Hanford (R-N.C.) and John E. Sununu (R-N.H.) are co-sponsors of the bill.

Hagel’s bill would call the new regulator the Office of Federal Enterprise Supervision.

Congress is questioning whether the two government- chartered, shareholder-owned companies, which own or guarantee 42% of the $7-trillion U.S. mortgage market, are properly regulated.

That follows revelations that Freddie Mac had accounting errors and employee misconduct related to a restatement of earnings for the last three years. Fannie Mae and Freddie Mac are regulated by the Office of Federal Housing Enterprise Oversight, a part of the Department of Housing and Urban Development.

Many lawmakers are awaiting the Sept. 4 testimony of Treasury Secretary John W. Snow before the House Financial Services Committee on his recommendations for regulating Fannie Mae and Freddie Mac.