Treasury Department officials and key House members have reached an agreement on regulating the size and growth of Fannie Mae's and Freddie Mac's giant mortgage portfolios, and the House may vote on the new portfolio language during the lame-duck session, sources say.The agreement does not call for a reduction of the $700 billion portfolios, which has been the cornerstone of the Bush administration's push for government-sponsored enterprise reform. However, the new GSE regulator would "establish standards by which the portfolio holdings, or rate of growth … will be deemed to be consistent with mission and safe and sound operations," the compromise language says. The House passed a GSE regulatory reform bill (H.R. 4161) by a 331-90 vote in October 2005, and the Treasury still has objections to several provisions, including an increase in GSE loan limits. Nevertheless, House Financial Services Committee leaders are trying to arrange for another vote on H.R. 4161 with the new portfolio language later this week. Treasury officials are meeting with key senators to line up support. However, passage of H.R. 4161 by the Senate is very unlikely, sources say, since one senator can block consideration. But the Treasury/House agreement improves the chances of passing a GSE reform bill next year.

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