Snow: GSE Regulator Needs Receivership Powers

The new regulator for Fannie Mae and Freddie Mac needs receivership powers to ensure that investors understand that their corporate debt is not guaranteed by the U.S. government, according to Treasury Secretary John Snow."We need to disabuse people of that perception," Secretary Snow said in a speech to America's Community Bankers. "That is why clear receivership authority is necessary." Citing investment risk, the secretary argued that it is "vitally important for market stability" to give the new housing GSE regulator full and flexible authority to wind down the affairs of a government-sponsored enterprise "that gets into serious trouble." Fannie and Freddie executives recently urged Senate Banking Committee Chairman Richard Shelby, R-Ala., against adding receivership powers to a GSE regulatory reform bill he is drafting. The GSEs maintain that it could spook investors and raise concerns about the claims of debtholders. A Treasury official accompanying the secretary declined to comment on the progress Sen. Shelby is making on the GSE bill. "We haven't seen any product yet," he said. The chairman wants the banking committee to vote on the GSE bill by the end of March.