A congressional vote on new regulations governing Fannie Mae and Freddie Mac has been delayed until at least mid-September after House officials agreed last week to let a second committee review the proposed legislation.
Rep. F. James Sensenbrenner Jr. (R-Wis.), chairman of the Judiciary Committee, said on Thursday that the panel would take a look at the parts of the bill that fall under its jurisdiction, such as those related to criminal penalties and placing the companies in receivership if they run into financial trouble, said Sensenbrenner spokesman Jeff Lundgren.
Though several analysts and others with an interest in the bill characterized that review as routine, some argued that any delay in such a complicated and increasingly contentious piece of legislation could dim its chances.
"I think this raises serious concerns about whether anything will be done this year," said Bert Ely, a financial services consultant and longtime critic of Fannie Mae.
The House Financial Services Committee approved a version of the bill in May, when a speedy trip to the House floor and similarly quick progress through the Senate were expected.
Despite the delay in the House, Richard C. Shelby (R-Ala.), chairman of the Senate Banking Committee, hopes to have a draft of the legislation next week, according to Virginia Davis, a spokeswoman for the panel.
The review by the House Judiciary Committee comes as conservative lawmakers continue trying to build opposition around a provision requiring the two giant mortgage companies to set aside a portion of their profits for low-income housing.
The legislation's main provisions focus on creating an independent regulator for Fannie and Freddie following accounting problems at the two companies. The low-income housing proposal was added to gain support from Democrats but has emerged as the chief target of conservative opponents.
Rep. Barney Frank (D-Mass.), ranking minority member of the Financial Services Committee, said he fears the Judiciary Committee's review will only help opponents derail the bill. "My concern is [the delay] will be used for inappropriate purposes" such as lobbying House leaders to kill the bill, he said.
Critics of the proposed set-aside also think a delay works to their advantage. "The longer time goes on, the more concern will arise, and the more likely we will be able to resolve the issue by not having funding for advocacy groups," said Rep. Tom Feeney (R-Fla.).
Other observers played down the impact of the Judiciary Committee's review.
"I don't see this wrinkle as any stumbling block. The bill has plenty of real problems to overcome," said Kurt Pfotenhauer, a lobbyist for the Mortgage Bankers Association.
Those other problems include opposition from the Bush administration, which contends that the House version does not go far enough to reduce the size of the two companies, whose scope and ability to borrow at government-subsidized rates have raised concerns.
Others argue that management changes made at the companies following the revelations about their accounting have already reduced their share of the home mortgage market, and thus may make new regulation less urgent.
"From my standpoint, there isn't an urgency," said Al Mansell, president of the National Association of Realtors. "Nothing's happened at Fannie and Freddie that will change by legislation. They've already taken their medicine. People are pleased with the way they've responded to the problems. There's no dramatic need to do this in a hurry."