Fannie, Freddie Portfolios Could Stay Intact

After watching the country's largest home-mortgage loan giants cope with restatement fallout from accounting scandals for years, reports say that the U.S. Treasury might back away from its position to set limits on the portfolios of Fannie Mae and Freddie Mac.

The government-sponsored entities have been the target for many politicians over the past two years, as problem after problem emerged with the company's accounting.

According to the Wall Street Journal, the Treasury would back a bill giving a new regulatory agency discretion to decide how large Fannie and Freddie's portfolios should be, as well as what assets they may contain. The regulator would make its decisions hrough a public rule-making process, based on both the need for the companies to operate in a "safe and sound" manner and to avoid creating "systemic risks" to the financial markets.

This February, the White House asked Congress to create a new regulator for the pair, intimating that the regulator would be responsible for drastically cutting the $1.4 trillion investment portfolio held by the companies.

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Tax practice Finance
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