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House amends GSE reform bill to allow larger loan portfolios

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A long-debated bill intended to overhaul oversight of Fannie Mae and Freddie Mac could become bogged down again in Congress this year because of an amendment that sets aside a compromise with the Bush administration over how much authority the government will have to set limits on the mortgage repurchasers' loan portfolios. The bill, HR 1427, is intended to prevent a repeat of the management and accounting scandals that forced Fannie and Freddie to restate their earnings and fire top executives. To increase oversight of the government-sponsored entities (GSEs), HR 1427 would create a new regulator, the Federal Housing Finance Agency (FHFA), which would be authorized to set limits on their lending portfolios. Bush administration officials and many Republican lawmakers want to limit Fannie and Freddie's loan portfolios, which total about $1.4 trillion, saying the private companies have used the perception that their debt is backed to the government to take on more risk than is prudent. ...