If Congress does not pass a GSE regulatory reform bill, a Friedman Billings Ramsay analyst says he expects the Bush administration to kept a tight rein on Fannie Mae and Freddie Mac and limit their issuance of corporate debt."If the administration is handed reckless legislation or gets no legislation at all, we expect the Treasury Department would begin to flex its muscle regarding debt issuance, which if effective, could prove to be a de facto asset cap," FBR managing director Paul Miller says in a research paper. (The government-sponsored enterprises issue debt to finance the growth of the mortgage portfolios.) Mr. Miller also contends that the outlook for passage of a GSE reform bill this year is not good despite reports of negotiations to break a deadlock over GSE portfolio limits. "Following our meetings with Hill staffers, it appears to us that a compromise is further apart than many press outlets have claimed," the FBR analyst says.

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