Congressional pressure to continue to build on GSEs

ARLINGTON, Va. – Despite Fannie Mae and Freddie Mac’s pledge to begin registering their common stock with the Securities and Exchange Commission (SEC), leading Congressional critics say that they will continue to keep up the pressure, according to published media reports. “It’s going to take more than that in substantive change for me, in legislative terms, to go away,” Rep. Baker Richard Baker (R-La.) was quoted as saying after a hearing that focused largely on the two companies before the House Financial Services subcommittee he chairs. Baker said much of his new idea for reform legislation hinges on the outcome of an upcoming hearing, when Fannie and Freddie’s regulator – the Office of Federal Housing Enterprise Oversight – is scheduled to testify. Baker is perhaps the leading critic of the Government Sponsored Enterprises (GSEs) on Capitol Hill and has repeatedly threatened to increase their regulation. Compromises and pressure from the GSEs’ congressional allies has prevented him from doing so. According to published media reports, the latest controversy has to do with whether Fannie and Freddie would voluntarily submit to SEC regulation in their stock offerings. Currently they are exempted from Securities law and, in light of the recent SEC compromise, the Bush Administration has said it does not support legislation repealing that exemption.