Posted on 04/02/2003 11:51:03 AM PST by Starwind
Fannie Says It's 'Troubled' By OFHEO Disclosure Proposal
By John Connor of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Fannie Mae (FNM) is "troubled" by a proposal made by its regulator to facilitate the process whereby Fannie Mae and Freddie Mac (FRE) voluntarily register their common stock with the Securities and Exchange Commission.
The two mortgage finance giants agreed last July 12 to voluntarily register their common stock with the SEC pursuant to the 1934 Securities Exchange Act, and Fannie Mae earlier this week filed its Form 10 registrations statement and initial Form 10-K annual report with the SEC.
The Office of Federal Housing Enterprise Oversight, created by Congress in 1992 to oversee the financial safety and soundness of Fannie Mae and Freddie Mac, proposed a rule earlier this year that the regulator said "expresses OFHEO's authority regarding disclosure of financial information and provides support for the voluntary registration of common stock" by the firms with the SEC.
In a recent comment letter on OFHEO's proposal, Fannie Mae said it is "troubled" that the measures goes beyond filling regulatory "gaps" and would create a parallel authority for OFHEO to act as a back-up regulator regarding requirements that are under direct SEC jurisdiction.
"This assertion of overlapping authority is entirely unnecessary," Fannie Mae said.
"The regulation and enforcement of disclosure under the securities laws is the fundamental, bedrock mission of the SEC. It has been doing this for roughly seventy years and has accumulated vast institutional expertise and an unmatched perspective," the company said.
Saying "Congress has not charged OFHEO with the responsibility of investor protection," Fannie Mae said, "OFHEO's attempt to assume this role, in addition to or in place of the SEC, would not only be outside its statutory charge, but would also be a waste of OFHEO's resources and an unfortunate diversion of its institutional focus away from assuring the safe and sound operation of Fannie Mae and Freddie Mac."
Fannie Mae urged OFHEO to delete the portion of the proposed rule that would make failure to meet SEC requirements a violation of OFHEO's rules as well, and called on the regulator to make clear that it will not seek to deviate from the disclosure standards established by the SEC.
"It would be at best duplicative for OFHEO to establish a requirement that Fannie Mae must perform acts that we now are bound legally to perform pursuant to a statutory and regulatory framework administered and enforced by the SEC," Fannie Mae said. "Beyond that, it would be ill-advised for OFHEO to raise through this proposal the possibility that the agency might at some point seek to substitute its judgment for that of the SEC with respect to disclosure regulation and enforcement."
Freddie Mac said in a comment letter of its own that it "agrees with the substance of the proposed regulation," subject to certain comments, one of which was that "it is unclear whether OFHEO's proposed rule is imposing a disclosure obligation that is different from the specific SEC requirements that were the subject of the July 12, 2002 announcement."
FM Watch, the anti-Fannie Mae/Freddie Mac coalition, told OFHEO that it continues to support enactment of legislation that would bring both firms "under the full weight of the Securities Act of 1933 and the Securities Exchange Act of 1934 by repealing their status as exempted securities."
"We believe this change is essential to protect both investors and taxpayers," FM Watch added. .
-By John Connor, Dow Jones Newswires; 202-862-9273; John.Connor@dowjones.com .
(END) Dow Jones Newswires
04-02-03 1447ET- - 02 47 PM EST 04-02-03
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