WASHINGTON — Senate Banking Committee Chairman Richard Shelby, R-Ala., is seeking input from the Government Accountability Office and the Congressional Budget Office on the future of policies dealing with Fannie Mae and Freddie Mac.
In a letter Monday to CBO Director Keith Hall, Shelby requested a report on the implications of the government-sponsored enterprises' being allowed to increase their capital by retaining more of their earnings.
Shelby noted that Federal Housing Finance Agency Director Mel Watt had warned in February about the possibility of losses by the mortgage giants. While this has led to some support for higher GSE capital, Shelby said, others say that allowing more retained earnings "would allow the GSEs to be reconstituted without providing a commensurate reduction in taxpayer exposure to the multi-trillion-dollar housing finance market."
-
Sen. Bob Corker championed a provision he added to the budget bill that would temporarily prevent the Treasury Department from recapitalizing Fannie Mae and Freddie Mac and discussed other banking priorities in a sitdown interview with American Banker.
December 17 -
Fannie Mae and Freddie Mac gave $186 million to the National Housing Trust Fund, their first such contributions to a fund designed to provide construction and rehabilitation of rental housing for low-income families.
March 11 -
FHFA Director Mel Watt acknowledged that the principal reduction program may seem "too small and too late."
April 14
"Such an outcome could potentially reduce incentives for Congress to enact statutory reforms," Shelby wrote.
In a separate letter to the GAO, Shelby asked the watchdog to report on how the housing finance agency's oversight affects Fannie and Freddie's market dominance, as well as on other areas relevant to reforming the companies.
"Recently … the FHFA has taken steps that appear to encourage a more active, rather than a reduced role in the mortgage market for the enterprises," Shelby said in a letter to Gene Dodaro, the accountability office's comptroller general.
The senator wants the budget office to complete its report by the end of July and the accountability office to complete its report by Nov. 1.
"It is my hope that GAO and CBO will provide the committee with meaningful data regarding the market impact of FHFA's decisions to ensure that Congress takes steps to protect American taxpayers from risk," Shelby said Monday in a statement.