Senate Banking Committee Chairman Richard Shelby, R-Ala., plans to push for a committee vote on a GSE reform bill that would grant a new regulator clear authority to reduce the size of Fannie Mae's and Freddie Mac's mortgage portfolios.Sen. Shelby explained his legislative strategy in a private meeting with committee Republicans June 23, and sources indicate that he wants to mark up a GSE bill in mid-July. Under Shelby's bill, the new regulator will be able to order the two government-sponsored enterprises to reduce the size of their giant portfolios for safety-and-soundness reasons, to reduce systemic risks, and to further mission compliance. Fannie's and Freddie's portfolios have combined assets of $1.5 trillion. There will be no hard dollar cap or limits on the portfolios, sources said. Sen. Shelby has not released a copy of his bill yet, but sources indicate that it is much tougher on portfolio limits than a GSE bill passed by the House Financial Services Committee on May 25. However, the portfolio limits are not as tough as the Bush administration and Federal Reserve Board Chairman Alan Greenspan have advocated.

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