Falcon Defends OFHEO's Effectiveness

The congressional debate over Fannie Mae and Freddie Mac is mainly about their business activities,not safety-and-soundness issues, according to Armando Falcon Jr., director of the Office of Federal Housing EnterpriseOversight. "We are thoroughly fulfilling our mandate -- ensuring [that] theenterprises are operating safely and soundly and they are adequately capitalized," Mr. Falcon said in defendinghis agency. A bill sponsored by Rep. Richard Baker, R-La., would abolish OFHEO and transfer its responsibilitiesto the Federal Reserve Board. Rep. Baker contends that the current regulatory structure is no match for the sophisticationand "explosive growth" of the two housing enterprises. But Mr. Falcon disagreed. "If Congress wereto establish a new regulatory regime, the new regulator would not do anything different with respect to safetyand soundness than what we are doing now," the OFHEO director said. However, he said he expects that the newregulator would be asked to take a more active approach in reviewing the business activities of Fannie Mae andFreddie Mac. Such a review is outside of OFHEO's mandate. "So this is not about safety and soundness really;it is about whether or not the activities of the enterprises should be constrained," Mr. Falcon said in aninterview with MortgageWire. "I have no opinions on that.That is for Congress to decide." OFHEO's website address is http://www.ofheo.gov.