WASHINGTON - Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, today released a letter from the Honorable James B. Lockhart III, the Director of the Office of Federal Housing Enterprise Oversight (OFHEO), responding to the Chairman's inquiries pertaining to the potential policy implications of H.R. 3838 and S. 2169, which would increase the portfolio caps applicable to Fannie Mae and Freddie Mac.  Mr. Lockhart serves as the safety-and-soundness regulator for the two housing government-sponsored enterprises.

Mr. Lockhart noted that, "...it would not be in the best interest of the safety and soundness of the Enterprises to enact this legislation."  He also observes that, "...legislation increasing the portfolio is unnecessary, unsafe and unsound, and could have the unfortunate effect of appearing to set a target for subprime purchases that the Enterprises may not be able to meet safely."

"Director Lockhart states that the ‘right long-term solution' to these matters would result in the passage of a comprehensive government-sponsored enterprise reform bill, and I agree with his informed assessment," said Chairman Kanjorski.  "We should carefully consider the judgment of our safety-and-soundness regulators who have the capabilities to fully examine the risk involved.  By doing so, we hope to avert the potential of repeating the mistakes of the savings-and-loan crisis."


Click here to view a letter from the Honorable James B. Lockhart III, the director of the Office of Federal Housing Enterprise Oversight to Congressman Kanjorski