Meanwhile, efforts to resolve an impasse over the creation of a GSE affordable housing fund appeared to be in high gear following a July 19 meeting between House Financial Services Committee Chairman Michael Oxley, R-Ohio, and House Majority Leader Tom DeLay, R-Texas.One source said negotiations are "very fluid." A group of 34 conservative Republicans are demanding that the affordable housing provision, which requires Fannie Mae and Freddie Mac to contribute 5% of their after-tax profits to AH funds, be dropped from the GSE regulatory reform bill (H.R. 1461). They maintain that the taking of profits violates free-market principles and that the provision will allow Fannie Mae and Freddie Mac to reward their political supporters. In a letter to the majority leader, Rep. Oxley explains that the GSE bill passed by his committee in May includes "many safeguards" to prevent a misuse of the affordable housing funds. Although Fannie and Freddie are "shareholder owned," Rep. Oxley points out that the two government-sponsored enterprises were created to carry out a public purpose and enjoy special privileges and subsidies due to their government charters. "The affordable housing funds in H.R. 1461 will enable the enterprises to pass through more of their subsidy to consumers and better fulfill their mission," Rep. Oxley says in the July 18 letter.

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