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1 1 (March 3, 2008)

handle is hein.crs/crsaipf0001 and id is 1 raw text is: Order Code RS21896 Updated March 3, 2008 The Department of the Treasury's Authority to Regulate GSE Debt: A Legal Analysis Michael V. Seitzinger Legislative Attorney American Law Division Summary The Department of the Treasury is developing a more formalized approach for approving Fannie Mae's and Freddie Mac's debt issuances. Although the Department of the Treasury has traditionally used its approval authority merely to coordinate the timing of debt issuances, the department may seek to regulate the amount of debt that Fannie Mae and Freddie Mac may issue. This report analyzes the Department of the Treasury's legal authority over Fannie Mae and Freddie Mac and concludes that a court would likely hold that the department possesses the power to regulate the amount of debt issued by these two organizations. Introduction' In the wake of accounting scandals involving the Federal Home Loan Mortgage Corporation (Freddie Mac) and its sister organization the Federal National Mortgage Association (Fannie Mae) and, more recently, with various housing problems beginning with the subprime mortgage crisis, Congress has launched efforts concerning the oversight of Freddie Mac and Fannie Mae.2 Legislative efforts to increase the oversight of these two entities are still pending. The Department of the Treasury may assert that it has the power to regulate Fannie and Freddie's debt issuances more strongly than it has in the past.3 According to these reports, the Treasury Department would trace this 1 This report was originally written by Nathan Brooks, former legislative attorney, American Law Division. 2 For information on proposals in the 1 10th Congress, see CRS Report RL34236, Fannie Mae and Freddie Mac: Proposals to Regulate Their Mortgage Portfolio Size in the 110h Congress, by N. Eric Weiss. ' There are reports indicating that Treasury is considering new debt approval procedures for Fannie Mae and Freddie Mac. See, e.g., BUDGET OF THE UNITED STATES GOVERNMENT, FISCAL YEAR 2008: ANALYTICAL PERSPECTIVES, p. 75 (2007); Brian Collins, Treasury Wants GSE (continued...)

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