The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: patron_anejo_por_favor who started this subject	11/6/2003 6:28:15 PM
From: ild	Read Replies (2) of 306849

White House Economist Says Fannie Needs Shorter Leash A WALL STREET JOURNAL ONLINE NEWS ROUNDUP WASHINGTON -- A top White House economist said Thursday that a crisis at Fannie Mae or fellow government-sponsored enterprise Freddie Mac could potentially harm the broader U.S. economy. But a Fannie Mae spokesman quickly dismissed the notion. Speaking to a group of bank regulators, Gregory Mankiw, who is the chairman of the president's Council of Economic Advisers, said Fannie, Freddie and the Federal Home Loan Bank System need stronger regulation to reduce the risk of broader fallout. "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole," Mr. Mankiw said in a speech before the Conference of State Bank Supervisors. "This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions." Fannie Mae spokesman Chuck Greener cited a new analysis by former White House Council of Economic Advisers Chairman R. Glenn Hubbard, which was commissioned by Fannie, in which Mr. Hubbard said the argument that a liquidity crisis at the mortgage buyer could undermine the entire U.S. mortgage market "is not compelling." "The issue of 'systemic risk'... has been addressed many times by well-qualified analysts," Mr. Greener said in a prepared statement. "If the thrust of the comments made today was that the GSEs should be regulated by a strong, credible financial regulator, we agree." The Bush administration is trying to move most oversight of the two government-sponsored mortgage entities from the Department of Housing and Urban Development to the Treasury Department, where they would likely face tougher scrutiny. Freddie has been caught up in an accounting scandal and Fannie reported a $1.3 billion accounting error last month. Write to the Online Journal's editors at newseditors@wsj.com1 URL for this article: online.wsj.com

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