A top regulator has offered a plan intended to prod Fannie Mae and Freddie Mac to pass on more of their subsidy benefits to homebuyers and keep less for shareholders.

At a congressional hearing Wednesday, Aida Alvarez, director of the Office of Federal Housing Enterprise Oversight, proposed that Congress overhaul the mortgage agencies' boards of directors.

She suggested the political appointees to each board be specifically charged to represent "the public's interest in maximizing the benefits provided to mortgage markets." The President appoints five of the 18 members on each agency board.

Ms. Alvarez is the latest high government official to argue that Fannie and Freddie get substantial financial benefits from the government but do not pass through enough of this to homebuyers. Her office monitors the safety and soundness of Fannie Mae and Freddie Mac, formally the Federal National Mortgage Association and Federal Home Loan Mortgage Corp.

In her testimony to the House Banking Committee's subcommittee on capital markets, securities, and government-sponsored enterprises, Ms. Alvarez supported recent findings by the Congressional Budget Office and the Treasury Department that Fannie and Freddie got about $6 billion in an implicit government subsidy last year.

She also agreed with their estimate that the agencies had passed through about $4 billion in the form of lower mortgage interest rates to consumers but retained the rest as profits.

Fannie and Freddie have criticized the methods used to compile those numbers. Their representatives were to testify before the subcommittee Wednesday afternoon.

In response to previous questions from Rep. Richard Baker, R-La., chairman of the subcommittee, Ms. Alvarez said that Fannie and Freddie would run out of capital if interest rates rose 1% per quarter for six successive quarters and there were heavy credit losses. But she noted that such a scenario is highly unlikely.

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