House Financial Services Chairman Michael G. Oxley (R-Ohio) and Ranking Minority Member Barney Frank (D-Mass.) have urged Congress to support higher 2005 funding levels for the federal regulator in charge of overseeing mortgage corporations Freddie Mac and Fannie Mae.

In a letter to the House Appropriations Committee, the Congressmen asked for $59.2 million for the Office of Federal Housing Enterprise Oversight for 2005. OFHEO’s funding level was $39.9 million in 2004.

“OFHEO is in the middle of a special examination of Fannie Mae and deserves financial support as it continues its important oversight work,” Oxley said. “I’m concerned that the funding level is inadequate.”

OFHEO last week released a report, revealing that in past years, Fannie Mae had used improper “cookie jar” reserve accounting – setting aside large cash reserves to reduce revenues in some years so they can be used in other years when the company needs them. The agency this week announced a plan to add more transparency to Fannie Mae operations.

OFHEO is engaged in an ongoing investigation of Fannie Mae, as well as its younger rival Freddie Mac, which last year was found to have smoothed over earnings in past years by using similar accounting tactics.

“At a point when OFHEO is performing a valuable service in calling attention to financial missteps at Fannie Mae, it sends exactly the wrong message to underfund its already inadequate budget,” Frank said.

The letter was signed by the leadership of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Subcommittee Chairman Richard H. Baker (R-La.) and Ranking Minority Member Paul Kanjorski (R- Pa.).

OFHEO is funded through assessments on the government sponsored enterprises it regulates.

***

Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

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