Robbing Fannie to Pay Fhlubbie

WASHINGTON - The House Financial Services Committee turned away a proposal to have the 12 Federal Home Loan Banks, known as "Fhlubbies" distribute as much as $500 million a year in affordable housing funds collected from Fannie Mae and Freddie Mac under a pending reform of the secondary mortgage market.

Rep. Spencer Bachus, the ranking Republican on the committee, made the suggestion because he and other Republicans in Congress worry that the proposed affordable housing funds will be used by liberal-leaning housing advocates to further their agenda and they feel the FHLBs, which already distribute $100 million a year in affordable housing money, would be a better judge of funding. Some Republican lawmakers likened the proposed fund to a new tax or even robbery. But Barney Frank, the chairman of the committee who developed the affordable housing proposal, said the idea has yet to be explored, so he convinced Bachus to withdraw the proposal until it could be reviewed in hearings.

The proposal was one of several debated during the drafting, or mark-up, of a bill to set a new regulatory scheme over the secondary mortgage market and its main players, Fannie, Freddie and the FHLBs. The mark-up waws expected to be completed late last week, just before Congress adjourned for its Easter Recess.