On 18 Jun 2012, Too_Many_Tools <
too_man...@yahoo.com> posted some
news:08f6af4a-7c9e-4489...@q29g2000vby.googlegroups.com:
> Liberals SAY that Bush and his Republicans are responsible for the
> poor economy and its slow recovery.
But everybody knows liberals lie.
Laugh..laugh..laugh..
> TMT
http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-
freddie-mac-and-fannie-mae.html?pagewanted=all&src=pm
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
Published: September 11, 2003
The Bush administration today recommended the most significant regulatory
overhaul in the housing finance industry since the savings and loan crisis
a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency
would be created within the Treasury Department to assume supervision of
Fannie Mae and Freddie Mac, the government-sponsored companies that are
the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to
set one of the two capital-reserve requirements for the companies. It
would exercise authority over any new lines of business. And it would
determine whether the two are adequately managing the risks of their
ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of
Fannie Mae and Freddie Mac -- which together have issued more than $1.5
trillion in outstanding debt -- is broken. A report by outside
investigators in July concluded that Freddie Mac manipulated its
accounting to mislead investors, and critics have said Fannie Mae does not
adequately hedge against rising interest rates.
''There is a general recognition that the supervisory system for housing-
related government-sponsored enterprises neither has the tools, nor the
stature, to deal effectively with the current size, complexity and
importance of these enterprises,'' Treasury Secretary John W. Snow told
the House Financial Services Committee in an appearance with Housing
Secretary Mel Martinez, who also backed the plan.
Mr. Snow said that Congress should eliminate the power of the president to
appoint directors to the companies, a sign that the administration is less
concerned about the perks of patronage than it is about the potential
political problems associated with any new difficulties arising at the
companies.
The administration's proposal, which was endorsed in large part today by
Fannie Mae and Freddie Mac, would not repeal the significant government
subsidies granted to the two companies. And it does not alter the implicit
guarantee that Washington will bail the companies out if they run into
financial difficulty; that perception enables them to issue debt at
significantly lower rates than their competitors. Nor would it remove the
companies' exemptions from taxes and antifraud provisions of federal
securities laws.
The proposal is the opening act in one of the biggest and most significant
lobbying battles of the Congressional session.
After the hearing, Representative Michael G. Oxley, chairman of the
Financial Services Committee, and Senator Richard Shelby, chairman of the
Senate Banking Committee, announced their intention to draft legislation
based on the administration's proposal. Industry executives said Congress
could complete action on legislation before leaving for recess in the
fall.
''The current regulator does not have the tools, or the mandate, to
adequately regulate these enterprises,'' Mr. Oxley said at the hearing.
''We have seen in recent months that mismanagement and questionable
accounting practices went largely unnoticed by the Office of Federal
Housing Enterprise Oversight,'' the independent agency that now regulates
the companies.
''These irregularities, which have been going on for several years, should
have been detected earlier by the regulator,'' he added.
The Office of Federal Housing Enterprise Oversight, which is part of the
Department of Housing and Urban Development, was created by Congress in
1992 after the bailout of the savings and loan industry and concerns about
regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders
and repackage them as securities or hold them in their own portfolios.
At the time, the companies and their allies beat back efforts for tougher
oversight by the Treasury Department, the Federal Deposit Insurance
Corporation or the Federal Reserve. Supporters of the companies said
efforts to regulate the lenders tightly under those agencies might
diminish their ability to finance loans for lower-income families. This
year, however, the chances of passing legislation to tighten the oversight
are better than in the past.
Reflecting the changing political climate, both Fannie Mae and its leading
rivals applauded the administration's package. The support from Fannie Mae
came after a round of discussions between it and the administration and
assurances from the Treasury that it would not seek to change the
company's mission.
After those assurances, Franklin D. Raines, Fannie Mae's chief executive,
endorsed the shift of regulatory oversight to the Treasury Department, as
well as other elements of the plan.
''We welcome the administration's approach outlined today,'' Mr. Raines
said. The company opposes some smaller elements of the package, like one
that eliminates the authority of the president to appoint 5 of the
company's 18 board members.
Company executives said that the company preferred having the president
select some directors. The company is also likely to lobby against the
efforts that give regulators too much authority to approve its products.
Freddie Mac, whose accounting is under investigation by the Securities and
Exchange Commission and a United States attorney in Virginia, issued a
statement calling the administration plan a ''responsible proposal.''
The stocks of Freddie Mac and Fannie Mae fell while the prices of their
bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to
$53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The
price of a Fannie Mae bond due in March 2013 rose to 97.337 from
96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.
Fannie Mae, which was previously known as the Federal National Mortgage
Association, and Freddie Mac, which was the Federal Home Loan Mortgage
Corporation, have been criticized by rivals for exerting too much
influence over their regulators.
''The regulator has not only been outmanned, it has been outlobbied,''
said Representative Richard H. Baker, the Louisiana Republican who has
proposed legislation similar to the administration proposal and who leads
a subcommittee that oversees the companies. ''Being underfunded does not
explain how a glowing report of Freddie's operations was released only
hours before the managerial upheaval that followed. This is not world-
class regulatory work.''
Significant details must still be worked out before Congress can approve a
bill. Among the groups denouncing the proposal today were the National
Association of Home Builders and Congressional Democrats who fear that
tighter regulation of the companies could sharply reduce their commitment
to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any
kind of financial crisis,'' said Representative Barney Frank of
Massachusetts, the ranking Democrat on the Financial Services Committee.
''The more people exaggerate these problems, the more pressure there is on
these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
''I don't see much other than a shell game going on here, moving something
from one agency to another and in the process weakening the bargaining
power of poorer families and their ability to get affordable housing,''
Mr. Watt said.