A House bill that would change how housing finance companies Fannie Mae and Freddie Mac are regulated is probably headed to the House floor this month, now that Republican leaders have brokered a compromise over a controversial affordable housing fund provision, members and House aides said yesterday.
The proposed fund would be financed by the profits of Fannie Mae and Freddie Mac and would distribute grants to support the construction of low-income housing. Conservative House members had objected to it out of concern the money would end up in the hands of liberal advocacy groups. Supporters of the fund estimated it could reach $1 billion in two years.
The disagreement threatened to derail the legislation, but on Thursday the bill's sponsors agreed with a proposal by House conservatives that would prohibit groups that engage in election activity from participating in the fund.
House Financial Services Chairman Michael G. Oxley (R-Ohio) and Rep. Richard H. Baker, (R-La.), had already agreed to direct money from the fund to projects in the hurricane-ravaged Gulf Coast for the first two years. The agreement, brokered in a Thursday meeting with former House majority leader Tom DeLay (R-Tex.), should clear the way for final House passage.
Some of the changes to the bill "don't do any harm. Some I'd rather not have seen," said Rep. Barney Frank (D-Mass.), the ranking minority member of the House Financial Services Committee and a proponent of the low-income-housing fund. But Frank said he was pleased to see the bill go forward, calling the fund "a fundamental breakthrough in federal housing policy."
The provision is part of a larger bill that would create an independent regulator for Fannie Mae and Freddie Mac after multibillion-dollar accounting scandals at both companies.
If the House passes the bill, it still faces obstacles to final passage. The White House has criticized the measure for not doing more to rein in the two companies, which critics contend have grown too large and pose a risk to the financial system.
The Bush administration prefers a Senate bill that would limit the types of assets the companies can hold. The Senate has not yet voted on the measure.
Rep. Barney Frank (D-Mass.) said he's glad to see bill advance.