 Richard Shelby, chairman of the U.S. Senate
Banking Committee, announced plans to hold hearings on the dependence of Fannie
Mae and Freddie Mac on their lines of credit from the Treasury Department.
"Fannie Mae and Freddie Mac have done a lot of
good - socially and economically - but, more and more, I think people want more
transparency and they want to know what's going on," said the Alabama
Republican.
Shelby's announcement came in the aftermath of
comments made by William Poole, president of the Federal Reserve Bank in St.
Louis. Poole suggested federal lawmakers look into eventually cutting the lines
of credit to government sponsored enterprises (GSEs). Poole thought Congress
should force GSEs to increase their capital over the years before the credit
from the Treasury Department is eliminated. Poole made this recommendation on
the basis of his belief that Fannie Mae and Freddie Mac are seriously
undercapitalized and an "unforeseen shock" could put the market in turmoil.
Shelby also expressed concern over the "ambiguity" of the relationship between
the GSEs and the U.S. government.
Representatives from the GSEs quickly challenged
Shelby's remarks.
"There is no other company in American with more
stringent requirements to ensure its safety and soundness," said Chuck Greener
of Fannie Mae. |
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