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To: RealMuLan who wrote (20877)	1/9/2005 6:59:00 PM
From: RealMuLan	Respond to of 116555

Federal agencies' advantages questioned HUD secretary says Fannie Mae, Freddie Mac don't need guarantees By MICHAEL MCKEE and JAMES TYSON Bloomberg News Fannie Mae and Freddie Mac don't need the lower borrowing costs that come from the U.S. Treasury's authority to buy $2.25 billion in each of their securities in the event of default, Department of Housing and Urban Development Secretary Alphonso Jackson said Friday. HUD plans to publish a proposed rule Monday increasing the amount of the companies' mortgage portfolio information marked as non-proprietary and open to public view, according to a draft of a press statement provided by the agency Friday. Prior to enactment, the rule will be open to public comment for 60 days, HUD said. Through their government ties, Fannie Mae and Freddie Mac gain a borrowing advantage over rivals that averaged about 0.40 percentage point from 1999 to the first half of 2003, according to a Federal Reserve study in December 2003. The total benefit was between $119 billion and $164 billion, the study said. "Whether they need to have the perceived guarantee by the government, no I don't think they need that," Jackson said in an interview with Bloomberg TV. "I think that they should in essence look to the open market like everyone else." A division of HUD, the Office of Federal Housing Enterprise Oversight, regulates Washington-based Fannie Mae and McLean, Va.-based Freddie Mac. "We are moving now to make sure that their books are open and transparent to the whole public the way it hasn't been in the past," Jackson said of the proposed rule. "I think that once that happens, they will look at market and be more responsive to the market." HUD in October required Fannie Mae and Freddie Mac to offer greater public access to details of loans they purchased in 2003 and 2004, including a borrower's race and gender and the property's census tract location. The agency Monday will propose making the same type of information available for the period from 1993 until 2003, according to HUD. The Treasury, which has called since September 2003 for creation of a tougher regulator for the two largest sources of money for U.S. mortgages, said in October 2003 it was willing to discuss with Congress whether the government should discontinue the "implied guarantee." Legislation creating a stronger regulator for the companies stalled last year in the Senate. Representatives at Fannie Mae and at Freddie Mac declined comment. "We have long called for stronger oversight of the government sponsored enterprises and we'll work with Congress on the specifics of reform," said Treasury spokeswoman Brookly McLaughlin. Jackson dismissed suggestions by Fannie Mae, Freddie Mac and their supporters in Congress that withdrawal of the implied guarantee would increase borrowing costs for homebuyers. "Competitiveness is very important," he said. "If we open it up, they will be competitive with everyone else, and the prices will stay low for homeownership; interest rates will stay low." Franklin Raines, ousted as Fannie Mae chief executive officer on Dec. 21, had said previously that Treasury backing doesn't constitute an "implied guarantee." chron.com