WASHINGTON -- Regulator Aida Alvarez implied in an interview on Friday that one of the government sponsored enterprises she regulates, Freddie Mac, supported recent Congressional efforts to trim her sails.

Under a law passed last year, Ms. Alvarez is setting up the Office of Federal Housing Enterprise Oversight to monitor the safety and soundness of the two secondary mortgage market giants - Fannie Mae and Freddie Mac. She asked the Senate Appropriations Committee for 60 staff members to help her to be an independent regulator.

That request was double last year's estimate of 30 staff members by the department of Housing and Urban Development. She also asked for a larger budget for 1994 of $10.7 million.

Cap on Staffing

Congress gave her the larger budget, but only 45 staff members. At the last moment, Sens. Alphonse D'Amato, R-N.Y., and Christopher Bond, R-Mo., introduced an amendment on the Senate floor to cap her staff at 45. They said they feared Ms. Alvarez was creating an oversize bureaucracy.

Congressional staff members say Freddie Mac engineered the Senate amendment. Freddie denies it. So did one of Sen. Bond's staff members, but Ms. Alvarez doesn't seem to buy that line.

She told American Banker that she spoke to the chairmen of Fannie and Freddie when it became clear that the two senators would oppose her.

"I did say I was hearing reports of lobbying activities on the Hill . . . and I thought that that would be detrimental," she recounted.

In response, she said, Fannie's chairman, Jim Johnson, asked what he could do to demonstrate his support. "I said, |You should tell the senator [D'Amato].'"

Mr. Johnson wrote Sen. D'Amato that he did not oppose Ms. Alvarez's staffing request.

Freddie's chairman, Leland Brendsel, followed with a letter supporting Ms. Alvarez's budget request of $10.7 million but said nothing about her request for more staff.

Asked to interpret Mr. Brendsel's letter, Ms. Alvarez said, "He supports the budget, not the staffing. I don't think I need say more."

Still, she said, she feels "pretty good."

"Look, I got my money. I've always been sensitive to the issue of having a lean organization and I'm going to do the job," she said. "I also think a year from now the nature of the discussion will be different. It'll be a different conversation when we have something in place."

Risk-Based Test

The agency was to have issued the first of quarterly reports on the capital levels of the two companies by the end of August. Ms. Alvarez would not say wen that would be issued.

The agency also must produce a risk-based test to determine capital levels for Fannie and Freddie Mac by the end of 1994, but the pace will be slower because of the hiring cap, Ms. Alvarez said.

"I have to revisit my plans. Whom can I hire? Whom can I get under contract? It does affect my strategy," she said.

And what of her relations with Freddie Mac after the budget debacle? Ms. Alvarez insists she will treat Freddie Mac fairly.

"I'm here to do a professional job . . . in a professional and collegial manner," she said.

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