Despite objections by the Bush administration, the House has approved an amendment by voice vote that restricts a new GSE regulator from using systemic risk as a reason for scaling back the size of Fannie Mae's and Freddie Mac's mortgage portfolios.The adoption of the portfolio amendment, sponsored by Reps. Randy Neugebauer, R-Texas, and Melissa Bean, D-Ill., is considered a significant victory for supporters of the two government-sponsored enterprises. But proponents of a strong GSE regulatory reform bill (H.R. 1427) don't expect the administration to turn its back on the bill at this point. "I would not think it is a deal-breaker," said Mike House, executive director of FM Policy Focus. During the debate Thursday evening, House Financial Services Committee Chairman Barney Frank, D-Mass., said he will continue to work with administration officials to address their concerns about the portfolios. "I don't consider this the last word on the subject," Rep. Frank said. A final vote on H.R. 1427 is scheduled for May 22.

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