Observers Still Expect GSE Bill to Prevail

Despite Bush Administration posturing that it wants a stronger GSE reform legislation than the bill cleared by a 65-5 vote by the House Financial Services Committee, lobbyists for key housing groups still believe some version of the measure will reach the White House by the time law makers go home for the holidays.The Administration is now indicating it can clamp down on Fannie Mae and Freddie Mac by regulatory fiat if Congress doesn't take a tougher stance, according to Kurt Pfotenhauer of the Mortgage Bankers Association, who said the "body language" emanating from the White House says "we don't need a bill." However, Housing Secretary Alphonso Jackson told the National Association of Real Estate Editors the Administration "is willing to work to strengthen the bill and make sure it moves forward." Noting that the committee markup is "but one step in a long, long process," he said the measure "fails to include essential core principles," including giving the new regulator authority to review all of Fannie and Freddie's "new and existing business activities" to ensure they are consistent with the GSEs' mission, the ability to increase the agencies' minimum capital requirements, and the power to ensure that their large market portfolios don't put the nation's financial system in jeopardy.