Frank Dismisses Fed Chief's Proposal

Restricting Fannie Mae's and Freddie Mac' portfolio investments to affordable housing loans won't help very many low-income people, according to House Financial Services Committee Chairman Barney Frank, D-Mass.Chairman Frank said Federal Reserve Board Chairman Ben Bernanke's recommendation [see item above] to refocus and limit the size of the GSE portfolios won't be effective in creating additional affordable housing unless there is a subsidy. "Affordable housing is not market-rate housing," he said. Rep. Frank's GSE bill would require the two government-sponsored enterprises to make annual contributions to an affordable housing fund that would subsidize the construction and rehabilitation of affordable rental units. If the GSEs "do only loans with no subsidy it won't be for very low-income people," Rep. Frank told reporters. Chairman Bernanke has not taken a position on the AH fund.