Senate Panel Would Trim Fannie Mae AndFreddie Mac Assets

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WASHINGTON - (07/29/05) -- The Senate Banking Committeeapproved a bill Thursday that will allow a new regulator setportfolio limits for Fannie Mae and Freddie Mac, requiring the twosecondary market giants to trim their $1.5 trillion worth ofmortgage-backed holdings. But the bill is not expected to go muchfurther this year because it varies greatly from the one passed bythe House Financial Services Committee, which does not includelimits on the two companies holdings. The Senate included theportfolio limits in its bill at the behest of Federal ReserveChairman Alan Greenspan, who testified to Congress he believes thehuge portfolios managed by the two companies are used to benefitthe companies public stockholders more than the homeowners Congressintended them to benefit. The bill does not include an affordablehousing fund, included in the House's bill, that would haverequired Fannie and Freddie to set aside a portion of their annualprofits to fund affordable housing projects. The Senate bill wouldalso allow the new regulator, which would oversee the 12 FederalHome Loans Banks, as well as Fannie and Freddie, to se a 'brightline' preventing the government sponsored housing enterprises fromexpanding into the primary, originations, mortgagemarket.

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