Treasury Reviewing GSE Options

A high-ranking Treasury official has signaled again that the department is preparing to take administrative actions if Congress does not pass a GSE reform bill that addresses potential risks to the financial system posed by Fannie Mae's and Freddie Mac's giant mortgage portfolios.The Treasury Department continues to work with congressional leaders to find a legislative solution to the portfolio issue, Assistant Secretary Emil Henry told a National Association of Federal Credit Unions legislative conference. "The Treasury will remain engaged on this important principled issue and is reviewing options in the event there is no legislation before Congress lets out prior to the November elections," he said. Treasury officials made it well known this summer that they are developing a debt approval process for housing government-sponsored enterprises that would allow the Treasury secretary to stop Fannie Mae and Freddie Mac from financing the growth of their portfolios. It also appears that the Treasury and the White House want to develop other ways to remind Fannie and Freddie that they are government-chartered and government-regulated entities.