Treasury Opposes Stand-Alone GSE Regulator

The Bush administration is sticking to its proposals and does not want Congress to consider the creation of a stand-alone, independent agency to regulate the government-sponsored enterprises, a Treasury official says.There are "real serious questions" about whether such an independent entity would have enough stature to regulate Fannie Mae, Freddie Mac, and the Federal Home Loan Banks "if it doesn't have the support of an agency like Treasury," Treasury Assistant Secretary Wayne Abernathy told reporters. The Bush administration "prefers" to place the new regulator under the Treasury Department, Mr. Abernathy said. He stressed that the new bureau of the Treasury must have the authority to approve new GSE products and activities. And the secretary must be able to review the new regulator's policy positions and regulations. Democrats have objected to these conditions, and it appears that some Senate Banking Committee members are considering an independent board to regulate the three housing GSEs. Mr. Abernathy made his remarks to the news media after speaking at an American Enterprise Institute seminar on privatizing GSEs. In his speech, he said the administration does not support privatization, but does support stronger regulation of GSEs to ensure their safety and soundness and to ensure that they "live up to their responsibilities."