Freddie Mac supports the idea of a strong regulator for itself, Timothy Bitsberger, treasurer for the second-largest U.S. home funding company, told a conference in London Wednesday, media accounts said.
Members of Congress are debating whether to create a more powerful regulator of Freddie Mac and its sibling Fannie Mae. The two mortgage giants hold a combined $1.4 trillion in their mortgage portfolios, and U.S. legislators, as well as the Bush administration, are concerned about potential problems.
“It benefits us to have a strong regulator behind us,” Bitsberger said, according to Reuters.
Bitsberger said the difference between the portfolio of a bank, a hedge fund and Freddie Mac is that his company discloses its risk management measures every month, Reuters reported.
“How can a large portfolio that is being managed properly contain more risk? I think a smaller portfolio that is not being managed properly can have more risk,” Bitsberger reportedly said.
Freddie Mac had a retained mortgage portfolio of $704 billion at the end of January.
Sen. Richard Shelby, an Alabama Republican, along with the White House and Federal Reserve, has reportedly argued the Freddie Mac and Fannie Mae portfolios pose a risk to the financial system by aggregating interest-rate risk and requiring the two listed companies to engage in extensive and complicated hedging.
“It’s important we don’t let legislation hamstring or hinder the future of the U.S. housing market, which is one-sixth of the U.S. economy,” Bitsberger said, according to reports.
Both Fannie Mae and its fellow government-sponsored enterprise, Freddie Mac, have been rocked by accounting scandals. 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.
In early February of this year, the Bush administration said Congress should create a new regulator for Fannie Mae and Freddie Mac and direct it to cut the $1.4 trillion investment portfolios held by the government-sponsored enterprises.
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