[Congressional Record (Bound Edition), Volume 148 (2002), Part 15]
[House]
[Pages 21212-21213]
[From the U.S. Government Publishing Office, www.gpo.gov]




    FEDERAL HOUSING ENTERPRISE OVERSIGHT FUNDING REFORM ACT OF 2002

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Bentsen) is recognized for 5 minutes.
  Mr. BENTSEN. Mr. Speaker, I rise today, along with the gentleman from 
Louisiana (Mr. Baker), the gentleman from Pennsylvania (Mr. Kanjorski), 
and the gentlewoman from New York (Mrs. Maloney), to introduce 
legislation that will provide a mandatory funding stream for the Office 
of Federal Housing Enterprise Oversight, the Federal safety and 
soundness regulator for the housing government-sponsored enterprises. 
Like that of other financial market regulators, I believe that there is 
a real need for this reform legislation because under current law, 
OFHEO's budget is subject to the annual appropriations process.
  OFHEO is the financial safety and soundness regulator for the two 
housing government-sponsored enterprises, Fannie Mae and Freddie Mac. 
These enterprises are two of the largest nonbank financial companies in 
the world. At the end of 1992, the GSEs' portfolio held 19 percent of 
loans on their books and 81 percent in the form of mortgage-backed 
securities.
  By March 2002, the housing GSEs held 43 percent of their assets on 
their books. As the Nation's mortgage markets have expanded, so too 
have the positions held directly by the GSEs, thus increasing the need 
to manage risk.
  Under current law, each year, Congress approves the overall amount of 
the OFHEO's budget as part of the Department of Veterans Affairs and 
Housing and Urban Development appropriations bill, and OFHEO's budget 
is paid for by semiannual assessments on the GSEs. As a result, 
taxpayers do not contribute toward the cost of regulating these 
enterprises. The current budget for OFHEO is $27 million. President 
Bush's fiscal year 2003 budget request is $30 million.
  The President's fiscal year 2003 budget also included the 
recommendation that OFHEO's budget be removed from the appropriations 
process. By taking it off-budget, this will put OFHEO on the same level 
as other financial safety

[[Page 21213]]

and soundness regulators such as the Office of the Comptroller of the 
Currency, the Office of Thrift Supervision, the Federal Housing Finance 
Board, the Federal Reserve Board, the Federal Deposit Insurance 
Corporation, and the National Credit Union Administration.
  By removing OFHEO's budget from the appropriations process, my 
legislation would ensure that OFHEO has the flexibility to set its 
resources in response to a rapidly changing marketplace. Since the 
creation of OFHEO in 1993, the GSEs have more than doubled in size and 
have developed innovative mortgage, debt, and derivative products which 
require effective oversight by OFHEO. While subject to congressional 
oversight and authorization, annual review of the OFHEO budget is 
cumbersome and prevents long-term planning by OFHEO. For example, under 
the current continuing resolution process, OFHEO must curtail its 
operations until their final, full appropriation is enacted.
  This year, OFHEO is operating with a $27 million budget and does not 
yet know if their higher budget will be approved by Congress and as 
requested by the President. As a result, personnel and planning must 
wait until Congress approves a final bill.
  Congress has long recognized that the safety and soundness regulators 
should have flexibility to respond to changes in the marketplace 
without restrictions of the annual appropriations process. This has 
proven quite successful in previous banking and thrift crises. The two 
housing GSEs of Fannie Mae and Freddie Mac remain financially sound. 
And recent voluntary changes by those institutions in disclosure and 
reporting practices, along with the implementation of OFHEO's risk-
based capital standards, have enhanced their safety and soundness. Yet 
concern has been raised about the duration of gaps between the 
companies' assets and liabilities due to the recent decline in interest 
and mortgage rates.
  While I believe both institutions are sufficiently capitalized and 
liquid to withstand the current market volatility, I also believe their 
regulator must be sufficiently empowered to protect the public's 
interest.
  This legislation will not add cost to the budget or to the taxpayers 
since OFHEO's funds are raised through assessments on the GSE.
  I also believe that congressional oversight of OFHEO will continue to 
be vigilant. This bill in no way lessens the existing oversight by the 
authorizing committees. Under the bill, OFHEO would be required to 
submit copies of its financial plans, forecasts, and reports to the 
Secretary of Housing and Urban Development and the Office of Management 
and Budget. In addition, OFHEO would be required to submit the results 
and conclusions of its examinations to Congress to ensure that Congress 
has the information it needs to review OFHEO's actions. All enforcement 
actions by OFHEO would also be reported to Congress.
  Mr. Speaker, I am filing this legislation today in hopes that it can 
be adopted either by itself or as part of an omnibus appropriations 
bill when Congress returns for legislative activities after the 
November elections. There is much consensus between the Bush 
administration and many in Congress, including members of OFHEO's 
authorizing committee, who join me in sponsoring this bill. By enacting 
this otherwise minor budgetary change, Congress would be ensuring 
continued stability in the financial markets with respect to the GSEs.

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