Fannie Mae chief executive Daniel Mudd says he believes the company's retained portfolio could fall dramatically, to just $10 billion, if limits imposed by a Senate GSE bill prevail.In a 39-page letter to members of the Senate Banking Committee, Mr. Mudd writes that "in our analysis a literal reading of the bill would lead to a reduction in the size of our portfolio to a range of $10 billion to $100 billion." At the end of July, Fannie's retained portfolio totaled $731.4 billion. The letter -- penned by Mr. Mudd and company chairman Stephen Ashley -- is dated July 31 and addresses questions raised by senators before and after a June hearing on the company's accounting scandal. Mr. Mudd's estimate on the company's retained portfolio addresses loan limits imposed by S. 190, a government-sponsored enterprise reform bill introduced by Senate Banking Committee Chairman Richard Shelby, R-Ala. Mr. Mudd also said that if S. 190 became law, it would bar Fannie (and Freddie Mac) from investing in mortgage-backed securities "in almost all instances." Fannie Mae can be found online at http://www.fanniemae.com.

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