Not everyone had reason to celebrate the truce struck last week by Rep. Richard H. Baker, R-La., with Freddie Mac and Fannie Mae.

In fact, the organization with perhaps the closest connection to Fannie and Freddie's risk management and disclosure practices, the Office of Federal Housing Enterprise Oversight, was noticeably absent when the agreement was announced last Thursday.

The GSEs' safety and soundness regulator acknowledged that it did not know anything about the negotiations, but downplayed the significance of the incident.

OFHEO director Armando Falcon said that he was not "trying to compliment or disparage" the GSEs' deal with Rep. Baker, "because we're still going through all the details." Fannie and Freddie "tell us that they're still working through the details themselves," he said. "It doesn't seem like even they have completely thought this through."

"These voluntary steps do not in any way substitute for strong regulation," and some of the points Rep. Baker and the GSEs agreed upon were already being developed by OFHEO, he said.

"What they've done isn't going to detract at all from our strong regulatory program, things that we have in place now, and things that we've had in the works," Mr. Falcon said. "We've even consulted with them on things we have underway but haven't quite announced yet. They chose to move forward with some small pieces of it, and that's up to them."

He would not reveal the specifics about those measures, but he said he has talked at length over the course of the year about things OFHEO wants to do to increase the GSEs' transparency, strengthen their capital, and increase their market discipline.

The agency will not do anything different from what it has planned for the rest of the year, despite last Thursday's deal, said Mr. Falcon, who plans to weigh in with his thoughts on the voluntary agreement at the Mortgage Bankers Association's annual convention next week in San Francisco.

Mike House, a lobbyist with FM Watch, a consortium of lenders that is seeking to prevent the GSEs from entering the primary mortgage market, said Rep. Baker was looking for a political solution to the problem, not a regulatory one.

"He knows that he will move toward a strong single regulator next year, which Fannie, Freddie, and FM Watch all agree is necessary," Mr. House said. "If you're moving in a political as opposed to a regulatory solution, there was no reason to have the regulator at the table."

Rep. Baker's office declined to comment.

The regulation of Fannie and Freddie is currently split between the Department of Housing and Urban Development, which handles their mission regulation, and OFHEO, which manages their safety and soundness. In 1992 Congress mandated the agency to create a risk-based capital rule that would subject Fannie and Freddie to a stress test to see if they could weather an economic crisis.

OFHEO's inability to establish such a rule over the past eight years may finally have caught up with it. Mr. Falcon denied this, but he agreed that the rule has taken too long to get out. Nonetheless, he said his agency is working to get it done.

"When I got here, the plan was to have it done much longer than the time frame I've imposed on the agency," he said.

Rep. Baker, who led a campaign to reform the oversight of the GSEs this year, has said his chief areas of concern were the risk they posed to taxpayers and the need for a stronger regulator to oversee their activities.

The voluntary agreement addresses many of his risk concerns, but he has said he will try to create a new, consolidated regulator next year.

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