FHFB Chair Defers to Congress on MBS

The new chairman of the Federal Housing Finance Board says Congress, not the regulator, should decide whether the Federal Home Loan Banks are to compete with Fannie Mae and Freddie Mac in the mortgage securitization market."Whether that field should be broadened with another participant doing roughly the same thing is really a matter for the Congress," Finance Board Chairman Ronald Rosenfeld told the Senate Banking Committee. Committee Chairman Richard Shelby, R-Ala., noted that the mortgage purchase programs increase interest rate risk, as well as accounting and financial reporting problems at the FHLBanks. Mr. Rosenfeld concurred with the senator's concerns. "I assure you we will be very active in getting into these programs," Mr. Rosenfeld. Chairman Shelby said he wants to move quickly to get Mr. Rosenfeld confirmed by the Senate. The former Ginnie Mae president became the Finance Board chairman thanks to a recess appointment by President Bush.