- The Washington Times - Tuesday, October 25, 2005


The U.S. House will likely pass a bill today strengthening oversight of Fannie Mae and Freddie Mac in response to more than $15 billion in accounting errors at the mortgage finance companies, House Majority Leader Roy Blunt said yesterday.

“My guess is probably it passes with a healthy margin,” Mr. Blunt, Missouri Republican, told reporters. The bill would create a regulator with power to tighten capital standards, bar new lines of business and shut down the two Washington-area companies in event of default.

The senior Democrat on the House Financial Services Committee overseeing the government-chartered companies said he will oppose the legislation unless Republicans allow lawmakers to vote on restricting access to an affordable housing fund.

Rep. Barney Frank, Massachusetts Democrat, and others are concerned that the Republican proposal would deny groups that need access to affordable housing money from tapping the $350 million fund. Republicans say the bill, without restrictions, could allow nonprofit groups to use the money as a “slush fund” to finance lobbying and other political activity.

“If they put the undemocratic piece of the bill forward in an undemocratic way, I would vote against the bill,” Mr. Frank told reporters yesterday. He was joined by Democratic Reps. Rosa DeLauro of Connecticut, Paul E. Kanjorski of Pennsylvania and Joe Baca of California.

The House probably won’t cast a vote on the amendment separate from the larger legislation, Mr. Blunt said. “I would not expect it to be subject to an amendment on the floor.”

Even without the support of Democrats, Republican sponsors of the legislation could win passage by leveraging their party’s majority in the chamber and rallying at least 218 votes. Republicans hold 231 seats in the House.

The Republican Study Committee — a group of more than 100 self-described fiscally conservative lawmakers — gave its blessings to the bill Oct. 7 after Rep. Michael G. Oxley, Ohio Republican and chairman of the Financial Services Committee, agreed to changes ensuring that the housing fund won’t bankroll voter registration, get-out-the-vote campaigns and other political activism.

The Bush administration opposes the housing fund, contending that the government shouldn’t dictate what companies do with their profits, said Alphonso Jackson, secretary of the U.S. Department of Housing and Urban Development.

The administration favors the tougher Senate version of the bill, which excludes a housing fund and requires the two companies to cut their combined $1.45 trillion mortgage holdings, he said.

Fannie Mae and Freddie Mac own or guarantee almost half the $7.6 trillion U.S. mortgage market. They make money on the difference between the returns on the mortgages they buy from lenders and their financing costs.

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