NEW YORK (CNN/Money) -
The Bush administration and some Republican leaders in Congress are pushing for tighter regulation on mortgage financing firms Freddie Mac and Fannie Mae, according to a published report.
The Wall Street Journal also reported Wednesday that the administration and leading Republicans in both the House and Senate want to take out a provision in current legislative language calling for the firms to spend millions on affordable housing programs.
The administration wants legislation to be much tougher in regulating the two federally chartered mortgage financiers than a current bill that sailed through a House committee on a 65-5 vote.
Both the White House and Federal Reserve Chairman Alan Greenspan argue that the two companies, which are involved in financing nearly half of U.S. home mortgages, have too many mortgage-backed securities in their portfolios. The language in the House legislation did not include a White House proposal to require the two companies to reduce those holdings.
The administration's call to reduce those portfolios has support of Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, who told the Journal, "We plan to address that." Shelby and Rep. Mike Pence, R-Ind., also are trying to strip the House version of the legislation of a provision calling for the firms to allocate 5 percent of their aftertax profits to affordable housing funds. Pence and Shelby argue that the provisions would allow the firms to funnel millions to advocacy groups in different political districts. Shelby told the Journal that creation of affordable housing funds smacked of "earmarking earnings for a political reason."
But the affordable housing funds and the two firms also have support in Congress, according to the report. Some members of Congress are reluctant to support any moves seen as hurting the housing market at a time when there is increasing concern about a housing-price bubble.
Partly because of Fannie and Freddie, "we have the strongest, most dynamic housing market in the world," Sen. Debbie Stabenow, a Michigan Democrat, said at a Senate Banking Committee hearing in April.
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