The Department of Housing and Urban Development's role as regulator of Freddie Mac and Fannie Mae came under question at a congressional hearing last week.

Officials from the General Accounting Office, HUD, and the Office of Federal Housing Enterprise Overight testified at a hearing of the House Subcommittee on Capital Markets, Securities, and GSEs.

"I am not comforted by the GAO's findings, nor do I believe that HUD has fulfilled its regulatory obligation," said the subcommittee chairman, Richard. H. Baker, R-La., after reviewing GAO's audit of HUD's role as mission regulator of Fannie and Freddie.

A central question was whether it would be better for a single entity to regulate GSEs. Responsibilities are currently divided between HUD and the oversight office.

The Federal Housing Finance Board, which oversees Home Loan banks, was proposed as a model for a single regulator for GSEs.

Rep. Baker will be meeting with HUD and oversight office to monitor progress, and will hold an oversight hearing on the home loan bank system in late September.

Rep. Baker is inclined to support a single GSE housing finance regulator, a staff member said.

He also questioned whether HUD could perform its regulatory role while competing with Fannie and Freddie for loans with its FHA loan program.

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