WASHINGTON — Fannie Mae and Freddie Mac, the mortgage-finance companies under government control, must cut their portfolios to $250 billion each under a proposal that would make permanent last year’s emergency agreement.
The companies, the largest sources of home-loan money in the U.S., would have to reduce their holdings by 10 percent a year starting at the end of 2010, the Federal Housing Finance Agency said in a statement Tuesday.
The draft rule would lock in the terms of a $200 billion emergency financing agreement struck with the Treasury Department when the companies were seized by regulators in September. Treasury had reserved the right to amend the terms and lift the portfolio restrictions if the companies regained their financial footing.
“It was clear at the time they entered the agreement, there was no easy way, if any, to get away from these portfolio restrictions,” Jim Vogel, head of agency debt research at FTN Financial in Memphis, Tenn., said.
Lawmakers could opt to overturn the portfolio-reduction rules as they restructure operations and decide the “appropriate mission and roles for Fannie and Freddie,” Vogel said. Bloomberg News
