Republican House leaders introduced legislation last week that would set a new regulatory scheme over Fannie Mae and Freddie Mac and give the new regulator new powers to set the portfolio size of the two secondary mortgage market giants.
The bill, sponsored by House Financial Services Chairman Michael Oxley and Rep. Richard Baker (R-LA), would give the new regulator the authority to order the two companies to adjust the size of their portfolios but would not set specific limits on those portfolios. Baker, a long-time critic of the two companies, said he was not swayed by recommendations by Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow to limit Fannie's and Freddie's mortgage holdings to $200 billion each and to limit their purchases of mortgage-backed securities, a key investment vehicle for CUs.
The bill would also set new capital standards for Fannie and Freddie and allow the regulator to determine new products and services the two companies could offer. It would also include a separate regulator for the 12 Federal Home Loan Banks under the same roof as the new regulator for Fannie and Freddie.
