Four of the five witnesses at the latest House Banking subcommittee hearing on a bill to tighten regulation of Fannie Mae and Freddie Mac said they oppose eliminating the government-sponsored enterprises' line of credit with the Treasury.
The hearing on a bill sponsored by Rep. Richard Baker, R-La., focused on so-called mission creep - the contention in the home finance industry that Fannie and Freddie are overstepping the boundaries of their charters. Previous hearings had focused on the risks to the government if the enterprises, which foster liquidity by buying home mortgages, were to default.
Testifying were David Bochnowski, first vice chairman of America's Community Bankers; Steve Bartlett, president of the Financial Services Roundtable; Christopher Sumner, president of the Mortgage Bankers Association; Bruce Smith, first vice president of the National Association of Home Builders; and Dennis Cronk, president of the National Association of Realtors.
Mr. Bartlett criticized Fannie's purchases of home equity loans originated at Home Depot stores and Freddie's Home Steps Buying Center, which markets foreclosed property.
Though the majority of the witnesses voiced concerns that Fannie and Freddie have ventured beyond their mission - or could do so under current regulation - only Mr. Bartlett favored cutting off the line of credit, which many argue gives the two home loan buyers an unfair advantage over private companies.
Fannie Mae spokesman David Jeffers said the testimony underscored that "the seniormost officials of the housing and housing finance community all have consistently objected to the elimination" of the credit lines. He said Mr. Bartlett has "a separate agenda tied to the agenda of FM Watch," a coalition of large mortgage lenders that want to contain Fannie and Freddie's expansion.
Still, the testimony about mission creep may have struck a chord even with some Democrats on the subcommittee. Rep. Paul Kanjorski of Pennsylvania, the ranking Democrat, recommended to Rep. Baker that the interested parties discuss the issues further at a round-table gathering..
Rep. Baker, who welcomed the idea, is currently planning a "GSE Summit," for September. He will accept recommendations on his bill through August to be discussed at the gathering.
A spokesman from Rep. Baker's staff said that it has not yet been decided whether the summit will take the form of another hearing or not, but that the intention is to hold a roundtable discussion where the parties can hold discussions.
