A bill to overhaul supervision of mortgage finance giants Fannie Mae and Freddie Mac moves to the U.S. House floor for debate this week, but amendments may be offered that would significantly alter a bipartisan deal struck in committee, Reuters reported.
Two provisions remain controversial despite months of closed-door negotiations – limits on the companies’ $1.5 trillion portfolios and an affordable housing fund kept flush with profits set aside by Fannie and Freddie, media reports said.
A Republican plans to offer an amendment that would place limits on the companies’ mortgage portfolios, as the White House and Federal Reserve Chairman Alan Greenspan have urged, Reuters said.
On affordable housing, a key Democrat plans to propose a measure to strip from the bill a deal among Republicans that prohibits lobbying groups from receiving affordable housing funds, according to reports.
Other amendments aimed at critical pieces of the bipartisan bill also are being weighed, congressmen, House staff and lobbyists told Reuters. Amendments must be submitted by noon Tuesday for consideration by the House Rules Committee.
Debate on the floor of the House will mark the farthest that efforts to stiffen oversight of the companies has gone in years of discussion on Capitol Hill.
While the House has moved forward, momentum in the Senate has fizzled as Senate Banking Committee Chairman Richard Shelby of Alabama has been unable to forge consensus with Democrats.
Industry analysts have said that unless there is a compromise in the Senate, nothing will happen.
Congress is weighing legislation to create a new regulator for the government-sponsored housing enterprises following multibillion-dollar accounting problems at Fannie Mae and Freddie Mac.
The agency last year uncovered accounting violations at Fannie Mae, setting off investigations by the Securities and Exchange Commission and the U.S. Justice Department and several shareholder lawsuits. As a result, the company will have to restate earnings by as much as $12 billion.
In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.
Fannie Mae’s financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.
Freddie Mac, Fannie’s fellow major government-sponsored enterprise, also experienced a management shakedown in 2003 when accounting irregularities surfaced.
The company has since restated several past years’ earnings amounting to approximately $5 billion. And The Office of Federal Housing Enterprise Oversight fined the company $125 million.
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