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NAHB Watching Fannie Mae, Freddie Mac 'Reform' Efforts

NAHB is closely monitoring discussions on Capitol Hill over so-called “reforms” for Fannie Mae and Freddie Mac to ensure that the effectiveness of those two institutions, which provide the foundation for the nation’s home finance system, is not compromised.

On June 24, Rep. Richard Baker (R-LA) introduced legislation that would change the oversight of the two government-sponsored enterprises (GSAs) from the Office of Federal Housing Enterprise Oversight (OFHEO) to the Office of Thrift Supervision, which, under the bill, would be renamed the Office of Housing Finance Supervision.

Baker’s bill — H.R. 2575, the “Secondary Mortgage Market Enterprise Regulatory Improvement Act” — would allow the Department of Housing and Urban Development to retain program oversight, including the enforcement of affordable housing goals.

Witnesses appearing at an initial regulatory reform hearing on June 25 included long-term proponents of stiffer regulation of Fannie and Freddie.

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Baker has asked the General Accounting Office to evaluate Freddie Mac’s financial accounting and reporting practices, and hearings over the Freddie Mac situation are likely to be held by the House Government Operations and Energy and Commerce Committees.

Significantly, House Financial Services Committee Chairman Mike Oxley (R-Ohio) and other key subcommittee members — including Housing Subcommittee Chair Bob Ney (R-OH) — are taking a cautious approach to GSE regulatory reform. Neither cosponsored the Baker legislation, and at the June 25 hearing both cautioned against a rush to judgment over Freddie Mac accounting problems.

On the Senate side, Banking Committee Chairman Richard Shelby (R-AL) is also moving cautiously.

The Treasury Department has not weighed in on H.R. 2575, and its views are likely to be critical to determining the content and momentum of any regulatory reform for the GSEs.

To read the legislation, click here, and enter the bill number in the box at the upper left.
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