Administration Softening on GSE Portfolios?

Fannie Mae and Freddie Mac should be able to invest in mortgage-backed securities, but only to the extent that it supports their basic secondary-market mission, according to Treasury Secretary John Snow.The secretary appeared to be softening the Bush administration's stance on portfolio limits by saying a new GSE regulator should have the flexibility and discretion to decide whether the government-sponsored enterprises are holding more MBS in their investment portfolios than they really need to carry on their basic mission. "What rationale is there to have more mortgage backed-securities than they need?" Secretary Snow asked during remarks to the Mortgage Bankers Association. The secretary declined to say whether a Senate GSE bill (S. 190) is too tough on portfolios. But Mr. Snow told reporters he is talking with the Senate leaders to get a bill moving. "I hope we can move it soon," he said.