GSE Portfolio Limits May Elude Compromise

Senate leaders may be too far part to agree on a compromise on GSE legislation that restricts Fannie Mae's and Freddie Mac's mortgage portfolios, but negotiations are continuing, according to Sen. Chuck Hagel, R-Neb."We may not be able to work it out -- but we have to try and we are trying," Sen. Hagel told an American Enterprise Institute seminar on strengthening regulation of the housing government-sponsored enterprises. The Nebraska senator reported that he talks to Senate Banking Committee Chairman Richard Shelby, R-Ala., three times a day about the GSE bill. Both senators support tough GSE portfolio limits. And he said Treasury Secretary Henry Paulson has brought new "vitality and credibility" to the effort to find compromise before Congress adjourns in a few weeks for the elections. Besides the portfolio issue, another "hang-up" is a provision that would require Fannie and Freddie to fund affordable housing grants. Sen. Hagel indicated that it could be worked out if there are enough controls over the AH funds. But the House AH fund provisions are not acceptable to the senator. "If that is the cost or price of a bill, I will not support a compromise," he said.