Barney's Rubble?

    The Bush administration today recommended the most 
 significant regulatory overhaul in the housing finance 
 industry since the savings and loan crisis a decade ago. 
 
    Under the plan, disclosed at a Congressional hearing 
 today, a new agency would be created within the Treasury 
 Department to assume supervision of Fannie Mae and 
 Freddie Mac, the government-sponsored companies that 
 are the two largest players in the mortgage lending 
 industry. 
 
    The new agency would have the authority, which now 
 rests with Congress, to set one of the two capital- 
 reserve requirements for the companies. It would exercise 
 authority over any new lines of business. And it would 
 determine whether the two are adequately managing the 
 risks of their ballooning portfolios. 
 
    The plan is an acknowledgment by the administration 
 that oversight of Fannie Mae and Freddie Mac — which 
 together have issued more than $1.5 trillion in 
 outstanding debt — is broken. A report by outside 
 investigators in July concluded that Freddie Mac 
 manipulated its accounting to mislead investors, and 
 critics have said Fannie Mae does not adequately hedge 
 against rising interest rates.

    These two entities — Fannie Mae and Freddie Mac — 
 are not facing any kind of financial crisis. ... 
 The more people exaggerate these problems, the more 
 pressure there is on these companies, the less we will 
 see in terms of affordable housing.