Snow advocates curbs on GSE portfolio expansion
U.S. Treasury Secretary John Snow advocated curbs on growth for Fannie Mae and Freddie Mac in testimony before Congress today.
Snow said the mortgage giants and other government-sponsored enterprises could destabilize financial markets if allowed to grow unchecked. He was testifying before the U.S. House Financial Services Committee in a hearing on housing GSE reform.
Snow pointed out that Fannie Mae's mortgage investments grew from $114 billion to $902 billion between 1990 and 2003, while Freddie Mac's grew from $22 billion to $660 billion. Such rapid growth creates risks for the U.S. housing market, he said.
The government official's comments were in line with sentiments expressed by Alan Greenspan, chairman of the Federal Reserve, in numerous instances including Congressional testimony last week.
"The sheer size of the mortgage-based investment portfolios of the GSEs (government-sponsored enterprises) has grown well beyond anything needed in carrying out their housing mission," Snow said in comments prepared for delivery to the House Financial Services Committee panel.
For some time, U.S. lawmakers have been calling for tougher regulation for Fannie Mae and Freddie Mac.
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