Industry News

Bill to strengthen oversight of Freddie, Fannie stalls in Senate

No consensus on provisions to cut lenders' portfolios

A bill aimed at strengthening oversight of government-sponsored mortgage purchasers Freddie Mac and Fannie Mae is not expected to emerge from Congress before the November elections, and could be stripped of provisions that would require the lenders to cut their portfolios if Democrats regain control of the Senate. James Lockhart, director of the Office of Federal Housing Enterprise Oversight, has been stumping for the bill this summer. Lockhart wants Congress to grant OFHEO -- or a new, independent oversight agency that would succeed it -- powers like those given to bank regulators. OFHEO or its successor needs such powers, he says, to prevent a recurrence of accounting and management scandals that led Freddie and Fannie to restate a combined $16 billion in earnings and pay more than $500 million in fines. Lockhart, who earlier this month said Freddie and Fannie still pose a "substantial systemic risk" to the U.S. banking system, wants Congress to grant OFHEO the authorit...