If the government pulled back some of the subsidies Fannie Mae and Freddie Mac enjoy, it would have very little impact on the housing market, a White House official said."All indications are that if the housing GSEs were to lose some of their implicit subsidy, private financial institutions would eagerly step in," said Gregory Mankiw, chairman of the President's Council of Economic Advisers. In a speech to the Conference of State Banking Supervisors, Mr. Mankiw stressed that Congress needs to enact proposals advanced by the Bush Administration to deal with risk posed by two "gigantic" secondary market agencies. He discounted claims by administration critics that the reforms would have "dire consequences" to the housing markets. "Inadequate reforms could conceivably increase systemic risk," he said. Separately, the Senate Banking Committee is looking at holding another GSE hearing this month, possibly on Nov. 13.

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