Riegle and Garn Push New Agency That Would Rule Freddie, Fannie

WASHINGTON - Key Senate Banking Committee members want Congress to create an independent agency to regulate the Federal National Mortgage Association and Federal Home Loan Mortgage Corp., the agencies known as Fannie Mae and Freddie Mac.

Sen. Donald W. Riegle, D-Mich., chairman of the committee, said at a hearing Thursday that an independent regulator may be needed "so that we can really have confidence" in the two federally chartered mortgage companies, which have combined liabilities of $750 billion.

Sen. Jake Garn, R-Utah, said the Department of Housing and Urban Development cannot police itself, let alone Fannie Mae and Freddie Mac. HUD "has been a disaster in terms of rules and regulations and following through in its own bailiwick."

Under last year's budget accord, Congress agreed to enact legislation by Sept. 15 to rein in potential risks to taxpayers from all government-sponsored enterprises.

The Bush administration wants to set up an "arm's-length" agency within HUD to regulate Fannie Mae and Freddie Mac.

HUD Deputy Secretary Alfred A. DelliBovi defended the department's track record. Six HUD employees oversee Fannie Mae and Freddie Mac full-time, and six others monitor the agencies half-time.

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