Industry News

OFHEO, Freddie chiefs spar over loan portfolio limits

Freddie exec disputes claims of 'systemic risk' to banking system

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The top executive at Freddie Mac and the head of the federal agency charged with overseeing the company's financial soundness are butting heads over a proposal to limit the portfolios of government-sponsored mortgage repurchasers. James Lockhart, director of the Office of Federal Housing Enterprise Oversight, on Friday renewed his calls that Congress give OFHEO greater authority over Freddie Mac and Fannie Mae to reduce what he calls the "systemic risk" the companies pose to the U.S. banking system and financial markets. Lockhart, speaking at the Hudson Institute in Washington, D.C., cited two recent studies that concluded tighter controls on Fannie and Freddie's portfolios won't necessarily drive up the cost of home loans for consumers or hurt affordable housing goals. In the last 15 years, while the nation's gross domestic product has doubled and the mortgage market has tripled in size, Fannie and Freddie's portfolios have grown by a factor of 10, Lockhart said, to $1.4 trillion. C...