Fed Urges Action To Curb Debt Sales ByFannie And Freddie

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WASHINGTON - (05/02/06) – New Federal Reserve ChairmanBen Bernanke said last week the Treasury Department should considerlimiting the debt Fannie Mae and Freddie Mac sell if Congress failsto act on a bill forcing the mortgage finance giants to shrinktheir huge investments. Bernanke’s remarks come as Congressis getting ready to take up legislation that would create newoversight over the two secondary mortgage market giants that doesnot include portfolio limits recommended by Bernanke’spredecessor Alan Greenspan. In his final year in office Greenspanwas an outspoken advocate of efforts to have the secondary mortgagegiants trim their huge mortgage portfolios. Greenspan saw the saleand management of the huge portfolios as benefitting the companyand its shareholders, but not mortgage borrowers, as the twocompanies were created to do. Meantime, President Bush nominated anew director of the Office of Federal Housing and EnterpriseOversight, the regulator over Fannie and Freddie. James Lockhart,who is currently deputy commissioner of the Social SecurityAdministration, will serve as acting director of OFHEO until he isconfirmed by the Senate.

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