Congressional pressure is mounting on the Office of Management and Budget to release the proposed risk-based capital regulation for Fannie Mae and Freddie Mac.

A report by the Office of Federal Housing Enterprise Oversight on the proposal has been in the OMB's hands for more than four months. Fannie Mae executives have been lobbying the OMB, among others, for changes.

Fannie is arguing that it and Freddie should play a role in creating their own stress-test models.

On Friday, Sen. Chuck Hagel, R.-Neb., entered the fray with a letter to Jacob Lew, director of the budget office.

Sen. Hagel noted that Congress required the development and implementation of a risk-based capital standard for Fannie Mae and Freddie Mac when it passed the 1992 Federal Housing Enterprise Financial Safety and Soundness Act. This act, he said "envisioned the completion of these standards by the end of 1994."

The regulation is designed to measure the amount of capital Fannie Mae and Freddie Mac would have to set aside to weather a worst-case economic scenario.

The OMB has had two extensions of two weeks each to consider the proposal. And a third extension was recently requested, a source familiar with the situation said. A spokewoman at OMB declined to discuss the status of the regulation.

To date, banking groups and one key House member have complained to Mr. Lew, the OMB director. In February, Sen. Christopher "Kit" S. Bond, R.-Mo., also expressed his concern about the 600- to 700-page report in a letter to Mr. Lew. Sen Bond cautioned that Congress did not authorize the housing office to use its regulatory authority to "intervene and micromanage the day-to-day business decisions of the GSEs."

In his letter Friday, Sen. Hagel noted that the large size of Fannie and Freddie "clearly puts them in the 'too big to fail' category." He argued that a standard is needed to show how "well capitalized" the companies are, noting that "any capital insufficiences need to be dealt with immediately."

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