I would like to thank Chairman Shelby for scheduling this hearing on ARegulatory Oversight of Government Sponsored Enterprise Accounting Practices.@ I also would like to thank Armando Falcon, Director of the Office of Federal Housing Enterprise Oversight (OFHEO), for joining us this morning.
We are here today to talk about OFHEO=s oversight of the safety and soundness of Freddie Mac and Fannie Mae, in particular its oversight of Freddie and Fannie=s accounting practices.
As we all know, the Government Sponsored Enterprises (GSEs) have played an invaluable role in creating a stable and liquid secondary mortgage market in our country, and this has resulted in our country having one of the highest homeownership rates in the world. Strong and effective oversight of the GSEs to ensure their safety and soundness for the public at large is clearly an important part of their long term success.
As a result, we need to do everything we can to make sure OFHEO has the staff expertise and resources it needs to quickly adapt to overseeing new products and methods at the GSEs. We need to make sure that OFHEO=s mission is focused, the lines of authority are clear, it has the tools it needs to thoroughly analyze and evaluate the GSEs complicated financial transactions, and that it is well-insulated from outside influences.
Although the GSEs have been given certain benefits by the federal government, they also must bear certain burdens. They must be subject to rigorous government oversight and they must abide by more conservative standards than other financial institutions in the market.
Needless to say, I look forward to today=s testimony and hope it can clarify some of this Committee=s concerns about OFHEO=s oversight of the GSEs=s accounting practices and any potential impacts on the ability of OFHEO to ensure the safety and soundness of Fannie Mae and Freddie Mac.