Fed Urges Action To Curb Debt Sales

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New Federal Reserve Chairman Ben Bernanke said the Treasury Department should consider limiting the debt Fannie Mae and Freddie Mac sell if Congress fails to act on a bill forcing the mortgage finance giants to shrink their huge investments.

Bernanke's remarks come as Congress is getting ready to take up legislation that would create new oversight over the two secondary mortgage market giants that does not include portfolio limits recommended by Bernanke's predecessor Alan Greenspan.

In his final year in office Greenspan was an outspoken advocate of efforts to have the secondary mortgage giants trim their huge mortgage portfolios.

Greenspan saw the sale and management of the huge portfolios as benefiting the company and its shareholders, but not mortgage borrowers, as the two companies were created to do.

Meantime, President Bush nominated a new director of the Office of Federal Housing and Enterprise Oversight, the regulator over Fannie and Freddie.

James Lockhart, who is currently deputy commissioner of the Social Security Administration, will serve as acting director of OFHEO until he is confirmed by the Senate.

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