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1 1 (July 26, 2004)

handle is hein.crs/crsuntaafzm0001 and id is 1 raw text is: Order Code RS21896 July 26, 2004 CRS Report for Congress Received through the CRS Web The Department of the Treasury's Authority to Regulate GSE Debt: A Legal Analysis Nathan Brooks Legislative Attorney American Law Division Summary Reports have recently surfaced that the Department of the Treasury may soon seek to exercise its approval authority over Fannie Mae's and Freddie Mac's debt issuances in a different manner than it has in the past. While the Department of the Treasury has traditionally used its approval authority merely to coordinate the timing of debt issuances, the Department may soon 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 an accounting scandal involving the Federal National Home Loan Corporation (Freddie Mac), various members of Congress have launched efforts to tighten oversight of Freddie Mac and its sister organization, the Federal National Mortgage Association (Fannie Mae).' As legislative efforts to increase the oversight of these two entities are still pending,2 it has been reported that the Department of the Treasury may soon assert that it has the power to regulate Fannie and Freddie's debt issuances much more strongly than it has in the past.3 According to these reports, the Treasury 1 For more information on the history and functions of these two organizations, see CRS Report RS21748, Fannie Mae and Freddie Mac: An Overview, by Nathan Brooks and Barbara Miles. 2 The 108th Congress has considered a variety of legislative proposals to strengthen oversight of Fannie and Freddie (See, e.g., H.R. 2575 (108th Cong.)), although those efforts appear to have stalled. 3 The Treasury Department has issued no formal indication that the Department is planning to exercise this power. Reports have recently surfaced, however, indicating that Treasury is considering this action. See, e.g., David S. Hilzenrath, New Tack in Mortgage Firm Oversight, (continued...) Congressional Research Service + The Library of Congress

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