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Bill on Fannie Oversight Faces Hurdles
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Oxley included the provision to secure the support of ranking committee member Barney Frank (D-Mass.). It also had the support of Fannie and Freddie competitors such as the Financial Services Roundtable, which represents large financial institutions.
But some lawmakers, who said they were surprised by the proposal, tried on Wednesday to do away with the fund. Some fear creating a "slush fund" for liberal advocacy groups. Others worry it would reinforce the perception among investors that the federal government would bail out Fannie and Freddie if they failed.
On Wednesday, the amendment to kill the fund failed 53 to 17, but its supporters said their numbers would grow on the House floor.
"I think Republicans on the committee are split down the middle, but when I talk to my colleagues outside the committee, it goes beyond concern to outrage," Rep. Tom Feeney (R-Fla.) said.
Frank disagreed. The Oxley bill "got a majority of Republicans," he said of Wednesday's vote. "If we won this by one vote, it would be different. . . . If every Republican on the committee [who voted for Oxley's bill] stays with it, we win."
Wednesday's vote also did not resolve a lingering debate over whether the regulator should define what kinds of businesses Fannie and Freddie can participate in. Fannie and Freddie's competitors want the regulator to draw a "bright line" between what Fannie can and cannot do. However, smaller lenders, who rely on Fannie and Freddie to help them compete with larger institutions, want the two companies to be able to remain flexible.
The committee on Wednesday took a middle road, and Oxley pledged to continue discussing the issue as the bill moves forward.
A final variable cited by many analysts is the pending release of the findings of Fannie Mae's internal investigation, headed by former senator Warren Rudman (R-N.H.). Some analysts said new revelations about mismanagement at Fannie Mae could turn the political tide against the company and in support of the White House's more restrictive position.
