The end of more than a decade of debate about privatization of two government-sponsored housing enterprises appeared to come last week when the Senate approved legislation drastically changes the regulatory apparatus, sets strict capital standards and establishes affordable housing goals. The measure, however, retains government sponsorship of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

"This action is a clear signal that Congress has affirmed the function and role of Fannie Mae and the structure of how that function will be carried out." said David R. Jeffers, vice president for corporate relations at Fannie Mae.

"If they were going to privatize us, they sure wouldn't have gone through the trouble of designing a new regulatory structure for us," said Edward L. Golding, director of planning and policy for Freddie Mac. "It looks to me as if they put privatization to rest."

Privatization of government activities was a buzzword of the early Reagan years; and Fannie Mae and Freddie Mac, when it became an independent company in 1990, were obvious targets.

But there never was an agreed-upon definition of what privatization meant, and several studies revealed how complicated such a move would be.

Though the Senate approved GSE reform by voice vote June 24, the Federal Housing Enterprises Regulatory Reform Act (S.2733) has become an engine pulling a long train of non-germane amendments. As last week ended, it was bogged down in a debate over an amendment that would require a balanced budget.

Nonetheless, the GSE reform is expected to be passed, and a conference will be held to resolve differences with a bill (H.R. 2900) passed last year by the House.

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