WASHINGTON - The agency that oversees the fiscal safety of Fannie Mae and Freddie Mac is again fighting for its independence.

A proposal approved this week by a Senate Appropriations subcommittee headed by Sen. Kit Bond, R-Mo., would end the status of the Office of Federal Housing Enterprise Oversight as an independent agency. It would become a part of the Treasury Department.

The full Appropriations Committee was considering the proposal Wednesday and was expected to approve it.

In a statement issued Tuesday, Aida Alvarez, director of the oversight office, blasted the move.

Ending the office's regulatory independence would be bad public policy, Ms. Alvarez said. "It would remove a large measure of repsonsible oversight from two of the nation's biggest corporations who have a combined $1.3 trillion potential claim on the American taxpayer."

She said in an interview later that under Sen. Bond's proposal, the director of the oversight office would become a Treasury staffer reporting to the Treasury Secretary instead of Congress.

"That opens up political possibilties that don't currently exist," she said.

This is not the first time Ms. Alvarez has faced opposition from Sen. Bond. Two years ago, when her office was just getting started, Sen. Bond was instrumental in capping its staff at 45.

Ms. Alvarez had asked for 60 staffers.

In an interview with American Banker in October 1993, Ms. Alvarez suggested that Sen. Bond's move was backed by Freddie Mac.

On Tuesday, however, Ms. Alvarez said she didn't want to speculate whether the latest proposal was backed by either agency.

The oversight agency is funded through fees paid by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. Its budget for the fiscal year 1996 is $14.9 million.

A Freddie Mac spokeswoman said her agency did not have an opinion on which structure would be best for the oversight office.

A Fannie Mae spokesman said the company had a policy of not commenting on the status of the agency.

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