Citing that a lower than requested budget appropriation would impede its ability to regulate Fannie Mae and Freddie Mac, Armando Falcon, director of the Office of Federal Housing Enterprise Oversight, wrote a letter to the House Appropriations Committee to appeal its decision.
OFHEO had originally requested $26.8 million for its fiscal 2001 operating budget, but was allocated $22 million. "The $4,770,000 shortfall will impede our efforts to examine the enterprises [Fannie Mae and Freddie Mac] with adequate depth, maintain a flexible and current risk-based capital regulation, and update our technology which enables us to do our job well with a small and efficient staff," Falcon said in his letter.
OFHEO is the only financial regulator subject to the federal appropriations process, and says that full funding would not require a budgetary offset because "we are funded entirely through semi-annual assessments on the enterprises."
OFHEO was established as part of a 1992 GSE overhaul bill, and its job is to solely regulate the GSEs' safety and soundness, including assuring the enterprises - in times of severe economic distress - would be adequately capitalized. That, Falcon stated, could not be done without full resources.
"The enterprises' exposure to credit risk has doubled in size in the seven years since OFHEO was established ... This dramatic growth demands prudent oversight," Falcon stated.
