GSE CEOs Oppose Bright-Line Test, Caps

In their first public testimony regarding GSE reform, the chief executives of Fannie Mae and Freddie Mac have voiced their dislike for a "bright-line test," portfolio limits, and public disclosure of their guarantee fees.Testifying before the Senate Banking Committee Wednesday, Freddie Mac chairman and chief executive Richard Syron and Fannie Mae interim CEO Daniel Mudd voiced their support of legislation to create a strong, bank-like regulator of the housing government-sponsored enterprises while signaling their opposition to certain proposals being discussed in Congress. The two CEOs, however, found their companies under fire from Sen. John Sununu, R-N.H., who said there is "no evidence" to support claims that the large retained portfolios of Fannie and Freddie aid in their housing mission. Sen. Sununu questioned their willingness to work with Congress to get legislation passed this year, noting that he is concerned about "mixed messages" coming out of the GSEs to "both sides of the aisle." Both GSE executives said a new regulator should have oversight of new products, but Mr. Mudd said he feared such oversight could go too far and hurt Fannie Mae. He suggested that one solution to the product approval dilemma would be to have an onsite examiner at Fannie to oversee products instead of having the GSE going through a 30-day approval process. (See the April 25 issue of National Mortgage News for the full story.)