WASHINGTON - Most lawmakers are kicking back during the August congressional recess but not Rep. Richard Baker.

The Louisiana Republican returned home to Baton Rouge a day after the GOP National Convention in Philadelphia and soon after dialed a reporter to plug his bill that would overhaul federal supervision of Fannie Mae and other government-sponsored enterprises - an unsexy issue that few handicappers predicted would be alive this late in an election year.

Odds are long that Rep. Baker will outlast the lobbying powerhouses of Fannie Mae and Freddie Mac and get his bill enacted this session. With Congress scheduled to adjourn in early October, the bill has not been voted on yet by his House Banking subcommittee and lacks a Senate companion.

But like a riverboat gambler on the Mississippi, Rep. Baker is challenging these multibillion-dollar corporations, which hold most of the cards, to come to the table.

Why should they? Even Rep. Baker acknowledges it would defy conventional wisdom.

"The clock is running against me, and I think that is the assessment the GSEs have made," he says. "They have been, throughout all of this, critical of every aspect of the bill, not proposing any compromise on any point, not suggesting in writing anything to bring about resolution. … From their corporate perspective, if they were seen negotiating to a settlement, it would mean they are acknowledging they have political risk" and could hurt investor confidence.

Nevertheless, Rep. Baker says, he urged Fannie executive vice president Tom Donilon in a recent powwow to reconsider and meet an Aug. 25 deadline for counterproposals before a roundtable discussion here next month. He and Rep. Paul Kanjorski, D-Pa., have invited company officials, lawmakers, regulators, and other interested parties to gather and hammer out a consensus.

Rep. Baker argues that it is actually in the self-interest of Fannie and Freddie to move toward middle ground. In less than veiled terms, he warns that he could make life difficult for them otherwise.

First, assuming he wins reelection, he vows to repeat the four rounds of capital markets subcommittee hearings he has held since March, which spooked Fannie and Freddie stockholders earlier this year.

"I would go back to the same GSE 101 and start all over again," he says. "Every one of these meetings generates significant press, which further hammers into the market there is political risk. What the GSEs need more than anything else is a nice, quiet Congress, where nobody is saying the words 'Fannie' or 'Freddie.' "

Second, if they refuse to compromise, the legislation - which he claims would have minimal short-term impact on the companies but gird them against future market downturns - could get worse for them. He contends that some Republicans would like a tougher bill.

"The sooner they can find a way to agree on something, the less intrusive, the less effect the legislation is likely to have."

Third, he warns that he could come back stronger next year. If Republicans keep control of the House and he outflanks the more senior Rep. Marge Roukema, R-N.J., to become House Banking Committee chairman, he would be dealing from a position of strength.

"It is a gamble for those who are in the legislative arena to play, hoping only to forestall, delay, and obfuscate the facts and face a potential person coming back who is strongly committed who might then have a better platform from which to operate."

Rep. Baker, 52, was acquainted with the secondary markets long before coming to Congress in 1987. He spent 20 years as a real estate agent and homebuilder in the Baton Rouge area, and was the founding president of the Central (La.) Area Homebuilders Association.

Few took Rep. Baker's bill very seriously when he introduced it in late February. The legislation would place oversight of the government-sponsored enterprises, now spread among the Federal Housing Finance Board, the Department of Housing and Urban Development, and the housing oversight office, in the hands of a new, more powerful agency.

Among other things, it also would repeal the $2.25 billion Treasury Department lines of credit for Fannie and Freddie and the $4 billion line for the Home Loan banks.

Yet Rep. Baker persisted, arguing forcefully that though Fannie and Freddie are healthy now, their rapid growth and increased repurchasing of their own mortgage-backed securities could be akin to the risky, unbridled practice of thrifts just before the savings and loan crisis of the late 1980s.

"At the same time they are raising their risk, they are not necessarily setting more money aside, more capital. Only they know today whether their hedging devices are sufficiently adequate to offset a reversal in the mortgage interest rate picture."

He adds: "My job is to get somebody who has the capacity to understand this sophisticated corporation, who can do the due diligence, and turn to us and to the public and say it's O.K. In fact, it may be all right. … But it is totally inappropriate for me to ask the fella who's doing it, and only that fella, if it is O.K. for him to continue doing it."

Rep. Baker has been bolstered by supportive comments recently from Federal Reserve Board Chairman Alan Greenspan and Clinton administration officials. He has been aided by a group of large financial institutions, which have organized the FM Watch lobbying group. He also recently announced that he and the other original co-sponsor, House Banking chairman Jim Leach, have been joined by 12 other lawmakers.

Still, Fannie and Freddie have organized their own coalition called the Homeownership Alliance, and have been backed by many Democrats and the Independent Community Bankers of America.

"It's not one man, one voice, one vote. There's a larger thing going on here," Rep. Baker says. "I fully intend to keep this a live issue until we return next year."

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