The agency that regulates Fannie Mae and Freddie Mac is hamstrung by the congressional appropriations process and needs more flexibility to respond to market forces, its director said.

In a speech Tuesday to an America's Community Bankers conference, Armando Falcon of the Office of Federal Housing Enterprise Oversight said his agency is the only federal regulator dependent on Congress to set the formula for funding. "This is simply unsound public policy," he said. Mr. Falcon wants to send the bill for regulation directly to the government-sponsored enterprises.

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