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Congress Puts New Regulator on the Fast Track

Monday, December 20, 2004; Page E09

Emboldened by Fannie Mae's financial troubles, senior members of Congress and the Bush administration are expected to press hard next year to pass long-delayed legislation that would create a new federal agency to oversee the mortgage-funding giant and its smaller rival, Freddie Mac.

The measure bogged down last spring when Fannie Mae and its allies came to loggerheads with the Treasury and Housing departments over how much authority the new agency should get. For example, the administration objected to a provision, backed by Fannie Mae supporters, that would have allowed Congress a review if the regulator chose to put the company into receivership.


Rep. Michael G. Oxley (R-Ohio) plans hearings on a regulatory agency. (File Photo)

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But now administration officials and lawmakers critical of Fannie Mae believe they have a strong chance to write as tough a regulatory regimen as they want.

"There's been a steady stream of troubling revelations about business practices" at Fannie Mae, said Andrew Gray, spokesman for Senate Banking Committee Chairman Richard C. Shelby (R-Ala.). "Senator Shelby believes that now more than ever it's time to act."

Gray said that establishing a new regulator for Fannie Mae was "the top priority for the committee" and that hearings on the proposal are likely to be held in February.

The chairman of the House Financial Services Committee also plans to push vigorously for a new Fannie Mae regulator. "We intend to hold hearings early next year," said Rep. Michael G. Oxley (R-Ohio).

Fannie Mae officials have said that they plan to cooperate closely with lawmakers to establish the new agency. Then again, no one is underestimating Fannie Mae's ability to wield influence on Capitol Hill. When it comes to Fannie Mae, Gray said, "nothing is ever easy."

-- Jeffrey H. Birnbaum


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