WASHINGTON - The General Accounting Office has urged Congress to merge the Federal Housing Finance Board with the Office of Federal Housing Enterprise Oversight, creating a single regulator for all three housing-related government-sponsored enterprises.

The GAO issued its recommendation in a report, released Wednesday, on the Federal Home Loan Bank System. Congress established the system in 1932 to promote home ownership by raising money on Wall Street and lending it to member institutions, which in turn can lend it to homebuyers.

No Mandatory Membership

In other findings, GAO recommended that thrifts which are now required to belong to the system - and buy its stock - be allowed to quit.

Low-risk member institutions should not have to buy as much stock, but the system as a whole should add retained earnings to serve as capital, the GAO said.

And the method the system uses to pay for a portion of the thrift cleanup should be rejiggered, according to the audit agency.

The GAO report won praise from the finance board. A spokesman said, "We're still analyzing it, but many of the recommendations of the report seem to be consistent with our report to Congress."

Thrift Group Lauds Report

The board agrees that its regulation and governance roles should be separated but "has no position on a merger" with the enterprise office.

Savings and Community Bankers of America, the savings and loan trade group, also generally praised the GAO's conclusions.

"This ain't half bad," said Brian P. Smith, the trade group's policy director. "We will have quite a number of technical quibbles."

For instance, the thrift group agrees that the system's thrift cleanup bills should be redistributed, but wants the entire membership to contribute to the payment, rather than limiting part of the payment to thrifts alone.

Impact of Full-Time Board

The GAO's recommendation for a regulatory merger may be given greater weight now because the finance board's part-time posts will be converted to full-time in January.

The board's chairman recently quit, and several other board members have not said whether they will stay on full time. Until the President chooses a new chairman, the Department of Housing and Urban Development's Nicolas P. Retsinas is managing the agency.

The GAO said a merger is needed to ensure that the Home Loan banks have an arm'slength regulator. The audit agency criticized the finance board for becoming "an advocate for the system," which it regulates.

Delegating Managerial Role

The Office of Federal Housing. Enterprise Oversight could not be reached for comment.

The GAO also advocates stripping the finance board of its managerial responsibilities for the system and delegating them to the individual district Home Loan banks, a move generally favored by the system banks, their members, and the finance board.

While the GAO did not detail how such a merger should be accomplished, it said the new safety-and-soundness regulator for government-sponsored enterprises should be either an independent agency like the finance board or an independent office within the Department of Housing and Urban Development, like the enterprise office.

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