Following is a statement issued last week by Rep. Henry Gonzalez, D.-Tex., who heads the House Banking Committee:
I have received reports that Mexico's government plans to introduce legislation next month to establish a secondary mortgage market and has asked Fannie Mae's help in this endeavor.
Although I am sure it is flattering to Fannie Mae to be sought out for its expertise by the government of Mexico, let's not forget that their system is quite different from our own.
I have received extensive testimony about the dangers of doing business or investing in Mexico during House Banking Committee hearings held prior to the Nov. 17 vote on the North American Free Trade Agreement.
One witness testified that Mexico's banks are operating in an environment "characterized by rapid 1992 loan growth, rising levels of troubled assets, and thinner capital relative to the United States."
Another witness noted that "financial statements issued by Mexican banks must be viewed with great caution." These are the same banks which would be selling loans to Mexico's secondary market and possibly to Fannie and Freddie Mac.
In addition, selling mortgage-backed securities should be viewed with caution since Mexico's securities market is currently viewed as being especially volatile.
Industry officials have been speculating that Fannie Mae is very interested in an active role in Mexico. While the active role has yet to be defined, it seems highly undesirable for either Fannie Mae or Freddie Mac to be shifting its resources to any other country in light of the serious housing shortage here in the United States.
Nowhere in these agencies' enabling legislation are they authorized to operate as international financiers or liquidity providers.