Home loan giant Fannie Mae needs tougher regulation, U.S. lawmakers said Wednesday, and investigation of the government-sponsored enterprise is continuing, a government official said.

“You may be assured the Commission staff thoroughly is investigating any evidence of financial reporting improprieties,” Donald Nicolaisen, the Securities and Exchange Commission’s chief accountant, told a House Financial Services subcommittee Wednesday.

“Congress must create a new regulator,” one with powers like those of the Federal Reserve, said Rep. Ed Royce (R-Calif.), according to media accounts. Several subcommittee members agreed that the home loan giant should submit to tougher government oversight.

The lawmakers’ call for stronger regulation comes in the wake of accounting scandals at both Fannie Mae and fellow GSE Freddie Mac. In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.

The SEC’s Nicolaisen testified before members of the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, in Washington, D.C., Wednesday.

House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) has pledged to continue his work toward a legislative reform package this Congress. Oxley has said that it is necessary to build a regulator for the GSE with the power, independence and funding to confront and handle such matters.

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