Even as banks grow more dependent on Fannie Mae and Freddie Mac, they are lobbying the government to sharply increase the capital that must be held by the housing finance agencies.

At stake is how the agencies and big banks carve up the mortgage investment business. Right now, Fannie Mae, formally the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp., dominate that business, purchasing 46% of the $639 billion of home loans made in 1995. A growing portion ends up in the agencies' investment portfolios.

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