Rep. Barney Frank, D-Mass., says there would be "a firestorm" if the Treasury Department tried to block or limit Fannie Mae and Freddie Mac from issuing debt to fund their operations.Speaking at a Federal Home Loan Bank forum, the ranking Democrat on the House Financial Services Committee acknowledged that the Treasury has several legal opinions that back its statutory authority to limit the debt issuances of the government-sponsored enterprises. But he said he doubts that the Treasury would use that authority. "I don't think that is going anywhere," he said. Speaking at the same forum, Treasury Under Secretary Brian Roseboro declined to speculate on how the Treasury might use that authority. "Our object is real GSE reform that improves safety and soundness and minimizes systemic risk," Mr. Roseboro said. If there is a GSE reform bill next year, Rep. Frank said Fannie and Freddie would have to contribute a percentage of their earnings (possibly 5%) to an affordable housing fund, which would make grants to housing developers. He also said the GSE bill should update the FHLBank affordable housing program to deal with cross-district mergers and make sure AH funds are going back into local communities.

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