Federal Reserve Board Chairman Alan Greenspan on Wednesday shot down GSE regulatory reform legislation passed by the House Financial Services Committee, saying it does not address his concerns about the systemic risk posed by Fannie Mae and Freddie Mac.In response to a question asked by Rep. Ed Royce, R-Calif., Mr. Greenspan said he preferred that Congress pass no government-sponsored enterprise reform bill rather than the one it has already passed, H.R. 1461 (the Federal Housing Finance Reform Act of 2005). The bill, which has yet to be taken up by the House, authorizes a new regulator to review Fannie's and Freddie's assets and liabilities, but stops short of capping their combined on-balance-sheet portfolios, which currently total $1.5 trillion. Mr. Greenspan favors reducing the on-balance-sheet holdings of the GSEs to just $200 billion. The Fed chairman made his remarks during testimony before the Financial Services Committee. Rep. Royce also opposes H.R. 1461.

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