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Thanks for the head's up.

I now know what regulatory changes Bush proposed. (See: New Agency Proposed to Oversee Freddie Mac and Fannie Mae)

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration’s proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

‘’The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,’’ Mr. Oxley said at the hearing. ‘’We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,’’ the independent agency that now regulates the companies.

‘’These irregularities, which have been going on for several years, should have been detected earlier by the regulator,’’ he added.

The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

Fannie Mae and Freddie Mac already had a regulator assigned to watch them --The Office of Federal Housing Enterprise Oversight.

So, Bush would rather create a new federal bureaucracy rather than fix the one already charged with oversight of Fannie and Freddie.

Of course, there's no guarantee that this new regulator would have done any better job guarding Fannie and Freddie than the existing one, however.

It's a mystery how the creation of yet another federal bureaucracy would've fixed the problem.

Here's what the OFHEO's web site says about their mission. (See: Supervision and Regulation)

The Federal Housing Enterprises Safety and Soundness Act of 1992 gives OFHEO a broad range of supervisory tools that the agency may employ not only to address Enterprise problems in a remedial fashion but also to take actions to prevent such problems from developing. The agency’s use of those authorities helps mitigate systemic risk by reducing the risk of failure of Fannie Mae and Freddie Mac.