WASHINGTON Rep. Richard H. Baker is planning a hearing May 23 on a long-awaited Congressional Budget Office report that will estimate the annual federal subsidy given to Fannie Mae and Freddie Mac, he told reporters Thursday.
Rep. Baker, the chairman of the Financial Services subcommittee on capital markets and government sponsored enterprises, has criticized the GSEs as benefiting unfairly from $2.25 billion of emergency lines of credit with the Treasury Department, tax exemptions, and other government protections. He had said in January that the report would show an annual subsidy of about $10 billion. That would be much higher than the $6.5 billion estimate from a 1996 Congressional Budget Office study, which Fannie and Freddies critics have used to argue that the subsidies benefit shareholders and management at the expense of homebuyers. Rep. Baker said on Thursday that the new report would be released soon.
The Louisiana Republican introduced a controversial bill last month that would put Fannie and Freddie under the Federal Reserve Boards supervision. That would require the secondary mortgage market giants to get the central banks approval before entering new businesses. He has so far received little support in the House and Senate for his measure.
Were looking at GSE reform right now and working hard on it, but were trying to work on it without talking about it, Senate Banking Committee Chairman Phil Gramm said Thursday. He has not taken a public position on the Baker bill.
Separately, the Senate Banking housing subcommittee has scheduled a hearing May 8 to examine the quality of regulation of Fannie and Freddie. The hearing is billed as purely oversight, and panel Chairman Wayne Allard will not offer legislation to overhaul regulation of the two giant housing financiers, according to his spokesman.
The panel will take testimony from Freddie Mac chairman and chief executive officer Leland C. Brendsel, Fannie Mae chairman and CEO Franklin D. Raines, and Armando Falcon, the director of the Office of Federal Housing Enterprise Oversight.