A House bill to strengthen oversight of mortgage companies Fannie Mae and Freddie Mac will cost the federal government $300 million over 10 years, the Congressional Budget Office said yesterday.

The finding may increase opposition to part of the bill that would force the two firms to set aside 5 percent of their profit into a low-income housing fund: Much of the added cost, according to the CBO, would stem from the fact that Fannie Mae and Freddie Mac would be able to deduct the hundreds of millions of dollars flowing into the fund from their taxes.

The budget office examined a bill that the House Financial Services Committee approved in May that would establish a new agency to oversee Fannie Mae and Freddie Mac. The bill, which cleared the committee on a 65 to 5 vote, follows a series of accounting scandals at the companies.

A group of conservative lawmakers who are critical of the bill had requested the CBO review and are trying to keep the legislation from reaching the House floor. They are particularly critical of the low-income housing fund, contending it would turn into a "slush fund" for Fannie Mae and Freddie Mac to reward their political allies. The fund is projected to generate as much as $6.4 billion over 10 years.

In response, House Financial Services Chairman Michael G. Oxley (R-Ohio) recently began circulating a package of compromise measures aimed at addressing their concerns. His compromises include having the fund sunset after five years, reducing the amount set aside and delaying distribution of the funds for one year.

Oxley has also proposed dedicating 25 percent of the set-aside to help the federal government pay off costs left over from the savings and loan crisis. By paying off that debt, the legislation could possibly add money to the Treasury, said a spokeswoman for Oxley.

Analysts had mixed reviews of the budget office report.

"The outlay of federal funds occurs only on paper. There are zero federal dollars actually spent on the housing fund. These funds would come exclusively from [Fannie and Freddie] under the House bill," said Howard Glaser. "Members of Congress understand that this is just an accounting requirement. There won't be any real impact on the bill from this."

However, Karen Shaw Petrou, managing partner of financial services consultancy Federal Financial Analytics Inc., wrote in a recent research note that the budget office's findings would probably "swing additional members" to side with bill opponents.

Even if the fund survives in the House, it faces an uncertain future in the Senate.

Senate Banking Chairman Richard C. Shelby (R-Ala.) has come out against such a fund, saying it would give the companies an incentive to increase their investment portfolios, which critics contend are already too large and risky.