House Capital Markets Subcommittee to Examine Need for GSE Regulatory Reform and Modernization
June 23, 2003
The House Financial Services Capital Markets Subcommittee, chaired by Rep. Richard H. Baker (LA), will hold a hearing Wednesday to review the need to reform the regulatory structure that oversees housing government sponsored enterprises Freddie Mac and Fannie Mae.
"Precisely what transpired at Freddie Mac remains unclear and will take the combined effort of several ongoing investigations to unravel. What is clear, however, is that this episode is but a symptom of a much larger problem of gaps in Freddie's current regulatory supervision,"Baker said.
Following the recent replacement of top executives at Freddie Mac, reports have indicated that the management shake-up may be due in part to accounting irregularities. Freddie was forced to restate its earnings for 2002, 2001, and 2000 earlier this year. Several agencies, including the Securities and Exchange Commission, the Eastern District of Virginia U.S. Attorney's Office and the Office of Federal Housing Enterprise Oversight (OFHEO), are investigating the situation at Freddie Mac.
The Subcommittee will focus on the current structure of regulatory supervision of the GSEs in an effort to ensure taxpayers and investors are sufficiently protected. Witnesses will also speak about the potential impact a stronger regulator would have on the U.S. capital markets.
Scheduled to testify:
- Sean J. Egan, Managing Director, Egan-Jones Ratings Co.
- Thomas A. Schatz, President, Citizens Against Government Waste
- Jay Cochran, Research Fellow, The Mercatus Center, George Mason University
- Karen Shaw Petrou, Co-Founder and Managing Partner, Federal
Source: House Financial Services Cubcommittee