A key Republican member of the Senate Banking Committee plans to vote for legislation sponsored by committee Chairman Richard C. Shelby (R-Ala.) that would tighten regulation of housing finance companies Fannie Mae and Freddie Mac, increasing the likelihood that the legislation will keep moving through Congress.
Shelby wants new regulations for the companies that are tougher than those recommended by a House committee in May but was having difficulty assembling support for the idea on his committee.
After meeting with Shelby yesterday afternoon and reviewing a draft of the bill, Sen. Robert F. Bennett (R-Utah), considered a swing vote, said he would support Shelby's proposal when the Banking Committee debates it, probably next week, said Bennett spokeswoman Mary Jane Collipriest.
Without Bennett's support, Shelby might have lacked the votes to pass a bill out of committee and had to postpone the hearing.
Bennett still has reservations about the authority the bill would grant a new independent regulator for Fannie and Freddie to adjust the size of the companies' investment portfolios. The senator "is keeping his options open to move to alter it on the floor or in conference," said Collipriest. But he is "committed to help move it," she added.
Congress is considering legislation to tighten regulation of Fannie and Freddie following multibillion-dollar accounting scandals at both companies.
The House bill would allow a regulator to adjust the size of the portfolios only if the companies run into financial trouble. Shelby prefers giving the regulator much broader discretion to limit the companies' investments.