Just a week into the New Year, and concerns about the political risks facing Fannie Mae and Freddie Mac are being renewed.

In a report titled “Fannie and Freddie: Hot Money Hits the Road,” Salomon Smith Barney analyst Thomas O’Donnell cited the expansion of the House Banking Committee — it was given jurisdiction over securities and insurance and renamed the Financial Services Committee — as one of five reasons for last week’s selloff of shares in the government-sponsored enterprises.

Their shares surged and then plunged Wednesday after the Federal Reserve cut rates. Before regaining some ground in midday trading Friday, both companies’ shares had fallen about 12%.

The shares were whipsawed last year as Rep. Richard Baker repeatedly charged that Fannie and Freddie were not adequately regulated, and that their growing debt poses a risk to taxpayers. In October the two sides finally cut a deal under which Fannie and Freddie agreed to increase disclosure and issue subordinated debt.

But the Louisiana Republican was back in the news this week, standing shoulder-to-shoulder with new Financial Services Committee’s chairman, Michael Oxley, R-Ohio, who promised to share power with him.

Rep. Baker is about to get some fresh ammunition in the form of a report from the Congressional Budget Office that puts the annual value of Fannie’s and Freddie’s privileges at “somewhere in the $10 billion range,” according to his spokesman. That would be much higher than the $6.5 billion estimate in a 1996 CBO study.

Neither company pays state and local income taxes, and each benefits from a $2.25 billion emergency line of credit with the Treasury, which has been from a perceived guarantee of a bailout by the government if they should go under during an economic crisis. According to the 1996 study, the government-sponsored entities only passed $4.4 billion of the subsidy to homebuyers; the rest went to shareholders and management. Critics have used that study as evidence that Fannie and Freddie do not use their subsidy effectively. How the new study breaks down the subsidy will affect the debate.

Freddie spokeswoman Sharon McHale said, “We have heard that this is an update of the 1996 study, which contained serious flaws .”

Ken Posner, an analyst with Morgan Stanley Dean Witter, said in a report Thursday that the GSEs real risk lies with the Treasury and the Fed. “Institutional opposition to the GSEs [exists] among staff in both agencies,” he said. Incoming Treasury Secretary Paul O’Neill is somewhat of a clean slate on this issue, and he may become influenced by this sentiment, he said.

Last year Fed Chairman Alan Greenspan said taxpayers and holders of the enterprises’ bonds could be at greater risk if government subsidies let Fannie and Freddie hold less capital. Treasury Under Secretary Gary Gensler sent GSE shares reeling in March when he said Treasury supports repealing its conditional line of credit to the GSEs.

Rep. Baker plans this year to raise some or all of the issues he pounded on last year. His spokesman said the he does not think Rep. Baker “believes the October deal changed very much.”

“Whereas one side may say that these voluntary risk management measures obviate the need for scrutiny over safety and soundness, the flip side could be maybe they obviate the need for a line of credit,” the spokesman said.

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