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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (42008)	9/21/2005 3:05:09 PM
From: ild	Read Replies (1) \| Respond to of 110194

WASHINGTON -- House Financial Services Chairman Michael Oxley, R-Ohio, told a group of credit union executives Tuesday that a controversial legislative proposal directing a portion of Fannie Mae (FNM) and Freddie Mac's (FRE) profits to hurricane relief is "not about politics." "This is not about advocacy, it's not about lobbying, it's not about politics. It's about getting money to that region the first two years dedicated to the Gulf coast to build affordable housing," Oxley said in a speech before the National Association of Federal Credit Unions. Oxley and Rep. Richard Baker, R-La., prematurely announced a few days ago that GOP leaders cleared the way for votes this week on a broader bill revamping the companies' oversight after sweetening the legislation by tying it to hurricane relief. They proposed to amend a contentious provision in the bill that would claim 5% of Fannie and Freddie's profits for affordable housing projects by directing some of that money to rebuild housing stock destroyed by Hurricane Katrina. "That's a critical need down there if you talk to the governors, talk to the mayors, talk to those individuals who have been displaced. They don't want to stay in temporary facilities. They don't want to stay with their relatives. They want to be able to rebuild," Oxley said. Votes on the larger bill, however, have been put off by House leaders as Oxley and Rep. Richard Baker, R-La., renegotiate the measure with conservative members of the Republican Study Committee - who oppose using private money for a public purpose and have blocked progress on the bill all summer as a result. Though the money in question would go into separate funds devoted to support housing programs for low-income people, some fear the government-sponsored enterprises could use it to lobby lawmakers by steering projects to key congressional districts - something regulators are already investigating at Fannie. They also worry the GSEs would lobby Congress through their nonprofit housing allies and advocacy groups, such as the Association of Community Organizations for Reform Now, or ACORN. "We are at a stalemate," said a senior GOP House aide who asked not to be identified. "There is hope that this could be solved ... If it can't, that just confirms the belief of many (RSC) members that this fund is not fixable, that it was a slush fund from beginning to end and that it ought not to be in the bill." Many in Washington fear Fannie and Freddie's recent public pronouncements of humility and apologies on Capitol Hill are temporary while the two recover from multibillion dollar accounting scandals that have damaged their credibility. That's why the conservative RSC wants Oxley and Baker to insert a provision in the broader bill that prohibits the money from going to any organization that "engages in federal election activity or lobbying" either directly or through an affiliate, the senior GOP aide said. "This seems to be a big area that the committee doesn't seem to be ceding ground on." Oxley said he, Baker and Ohio Republican Bob Ney, who helped draft the measure, planned to meet on the matter later Tuesday. He wouldn't say whether they've scheduled any meetings this week with the lawmakers who object to the measure. "Because of the (accounting) restatements and the concerns many people have about the GSEs, this legislation is critically important," Oxley said, recognizing Rep. Baker as a leader and "visionary" on the issue. Baker has been a vocal critic in Congress of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, highlighting weaknesses in their regulation and operations and calling for changes to their oversight long before accounting problems first surfaced at Freddie Mac in 2003 when the company ousted its top executives and restated several years of earnings. Similar problems have since emerged on a larger scale at Fannie and to a lesser degree within the FHLBank System - both of which are currently reauditing their books. Fannie Mae Chief Executive Daniel Mudd, who spoke to the credit union group Monday, told the group in a speech that Fannie was "making solid progress working through the issues and getting our house in order." Mudd said the company wants Congress to pass GSE reform and is monitoring bills in the House and Senate and is providing technical assistance to lawmakers when asked. "There are still some wrinkles Congress is ironing out. But we believe having a strong regulator is good for housing, good for the housing finance system and good for Fannie Mae," he said. Mudd also confirmed to Dow Jones Newswires before his speech that he broke bread with Federal Reserve Chairman Alan Greenspan during a lunch meeting last Tuesday - as the central banker intensified his call on Congress to restrict the company's portfolio investments. Greenspan warned in a letter released last week that failing to cut Fannie Mae and Freddie Mac's mortgage holdings could "prove to be destabilizing to our financial system as a whole" and reduce consumer access to mortgage money. Mudd characterized the lunch at the Fed as a "continuation of conversations" the company is having with a number of policymakers in Washington, declining to elaborate.