Treasury Secretary Henry Paulson says efforts to reach a compromise on a GSE regulatory reform bill are progressing but there is still a long way to go."So far the conversations have been very constructive, but we've got a lot further to go," Secretary Paulson told the Senate Banking Committee during a hearing on China's currency policies. The secretary said he was "encouraged" by the progress that was made late last year in negotiations with Rep. Barney Frank, D-Mass., which involved key provisions to strengthen regulation of two government-sponsored enterprises -- Fannie Mae and Freddie Mac. It is understood that Treasury officials and Rep. Frank agreed on a proposal that would allow a new GSE supervisor to regulate the size and growth of Fannie's and Freddie's investment portfolios. The secretary did not comment on the details of the negotiations.

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