After extensive efforts to receive a significant increase in funding for fiscal year 2001, the Office of Federal Housing Enterprise Oversight was not awarded its full request, though allocations were higher than this year's budget.
OFHEO, the safety and soundness regulator for Fannie Mae and Freddie Mac, submitted its budget proposal to the House Appropriations Subcommittee on Veteran's Affairs, HUD and Independent Agencies February 7. It requested $26.7 million, up from the $19.4 million it received this year. The increase was mainly to increase staff.
The subcommittee denied OFHEO's full request, and offered the agency $22 million. The denial comes after prominent members of the House Banking Committee have written letters to the appropriations committee urging the appropriations committee to award the agency receive its full request. Rep. John LaFalce (D., N.Y.), ranking member of the committee submitted a letter, and Rep. Richard Baker (R., La.), chairman of the capital markets subcommittee and Rep. Paul Kanjorsky (D., Pa.) submitted a joint letter.
LaFalce stated that although legislation is floating around to reform GSE regulation (see story, page 1), there is consensus to have strong safety and soundness regulation.
Baker and Kanjorsky stated that OFHEO should receive its full request because "it is crucial that OFHEO has sufficient capacity to fulfill its safety and soundness oversight of the enterprises."
"The Subcommittee's decision to deny OFHEO full funding strikes at the heart of our ability to fulfill our Congressional mission to regulate Fannie Mae and Freddie Mac," said OFHEO Director Armando Falcon upon hearing that OFHEO's full request was denied. "This decision demonstrates why our budget should not be subject to the political maneuverings of the entities we regulate and why OFHEO should be exempt from the appropriations process."