- The Washington Times - Wednesday, October 26, 2005


The House yesterday approved tighter oversight of the two largest buyers of home mortgages as majority Republicans also barred groups that run voter registration drives from getting money from a housing fund the companies would create.

The legislation, passed by a 331-90 vote despite White House opposition, would rein in Fannie Mae and Freddie Mac, the government-sponsored companies that combine to finance or guarantee more than three-quarters of U.S. home mortgages.

The bill had wide bipartisan support in the spring after a House committee approved it. But that eroded somewhat by the final vote because of a later Republican proposal to restrict money from a fund financed by Fannie Mae and Freddie Mac for housing the poor and hurricane victims.

The White House opposes the legislation over a broader issue: The bill would not force the two Washington-area mortgage companies, both beset by accounting scandals, to reduce their massive investment holdings.

The restriction would prohibit nonprofit community groups from getting such money if they have used their own funds for nonpartisan voter registration or get-out-the-vote drives, or, in some cases, lobbying in the last year.

Democrats contended the restriction would deny the poor the right to vote. They also portrayed the plan as part of an effort by conservatives that eventually could mean that such groups might not be able to get any dollars from any federal program in the future.

Supporting the Democrats’ position were civil rights organizations, unions and faith-based groups, including the NAACP, the U.S. Conference of Catholic Bishops and the American Jewish Committee.

During House debate, the second-ranking Democrat, Rep. Steny H. Hoyer of Maryland, said the Republican-backed restriction was “nothing more than a transparent attempt to disenfranchise voters who otherwise might not register to vote.”

Opponents of the restriction said current laws provide sufficient safeguards; for example, there is a ban on lobbying with federal funds and a prohibition against charitable organizations engaging in partisan electoral activities. They also said the ban would violate constitutional free-speech guarantees.

The ban was added recently to the legislation by the chairman of the House Financial Services Committee, Rep. Michael G. Oxley. It reflected a compromise with conservative lawmakers who wanted to prevent the millions of dollars in new-housing money from going to organizations that oppose Republican policies.

Mr. Oxley, Ohio Republican, told colleagues before the vote that the prohibition was intended “to ensure that they’re not political front groups with a left or right agenda.”

The overall bill would create a stronger federal regulator with authority over Fannie Mae and Freddie Mac. The companies, major donors to lawmakers of both parties, long have wielded great influence in Congress.

The legislation also calls for the companies to devote a small percentage of their annual profits to financing housing for the poor.

People affected by Hurricane Katrina would get priority. Based on those profits, the companies’ contributions to the fund could reach hundreds of millions of dollars.

The Bush administration opposes the bill because it does not match a Senate measure that would require Fannie Mae and Freddie Mac to reduce their mortgage-investment holdings, now worth a combined $1.5 trillion.

Federal Reserve Chairman Alan Greenspan has said those holdings must be diminished because their huge debt — about $2.5 trillion — poses a potential danger to the U.S. financial system.

The White House said yesterday that the House bill “fails to include key elements that are essential to protect the safety and soundness of the housing finance system and the broader financial system at large.”

Given the companies’ size and importance, “Congress must ensure that their large mortgage portfolios do not place the U.S. financial system at risk,” the White House said.

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