House Panel Passes Fannie, Freddie Bill

A congressional panel approved legislation that would create a stricter regulator for Fannie Mae and Freddie Mac in response to $13 billion in accounting errors at the mortgage finance companies since 2003.

The House Financial Services Committee voted 65 to 5 to create a federal overseer with authority to order the companies to cut their combined $1.5-trillion mortgage portfolios, deny new lines of business, alter capital standards and sell the assets of a company in the event of default.

The bill falls short of the regulatory crackdown supported by the Bush administration, omitting a requirement that the regulator cut the companies’ mortgage holdings, which generate about two-thirds of the companies’ profits.