Dec 13, 2007

OFHEO director James Lockhart on GSE reform

There may come a time, I hope we never get to that time, when we may have to relax. I'd hate to relax the capital requirement just because they are losing money. That is not the reason to relax the capital requirement.

There was a lot of pressure on the agency to ease the portfolios (in August) and now we are hearing more and more about the capital. I can tell you in retrospect that we made the exact right decision in August.

It does look like the portfolio limits could come off as early as late February. There is a reasonable chance that may happen. We will be looking at the capital. I told both (Fannie Mae and Freddie Mac chief financial officers) when they put out their financial statements we will start to look at the capital. And we are going to go through a list of what needs to be done.

~ James Lockhart, Director of Office, Federal Housing Enterprise Oversight, Reuters, December 13, 2007

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