Snow Wants a Tougher Bill on Fannie, Freddie

U.S. Treasury Secretary John W. Snow said Thursday that a bill passed by a House panel to stiffen oversight of mortgage giants Fannie Mae and Freddie Mac must be beefed up to bring it in line with White House policy.

But congressional staff members said the Bush administration might have a hard time ensuring that its central proposal got into the final bill after its push to force the companies to cut their mortgage portfolios was brushed off in bipartisan fashion by the House Financial Services Committee.

Congress is weighing measures to boost oversight of the government-sponsored companies after accounting problems that have led or will lead to multibillion-dollar profit restatements.

The House Financial Services Committee approved legislation by a vote of 65 to 5 on Wednesday that would create a regulator for Fannie Mae and Freddie Mac with stronger powers and controls over their businesses.

The bill gives the regulator authority to order Fannie Mae and Freddie Mac to adjust their $1.5-trillion investment portfolios of mortgages and mortgage-backed securities. But it does not direct the regulator to limit the holdings, as Snow had urged.

“We clearly have some work to do there,” Snow said. He said he hoped that the measure could be strengthened on the House floor and that the Senate would produce a “much better bill.”

But congressional staff members and others said the bipartisan nature of the House committee’s vote made it doubtful that the Senate would raise a potential stumbling block by opting for the White House’s tougher line.

Supporters of Fannie Mae and Freddie Mac say the companies provide crucial financing for housing and shouldn’t be hamstrung. Critics say the companies are so large they pose a risk to the U.S. financial system.

The firms’ shares, which have been beaten down this year on concerns over tighter regulation, rebounded Thursday. Fannie Mae jumped $2.34 to $59.37; Freddie Mac rose $1.47 to $64.99.