mr. chairman , i yield myself such time as i may consume . 
mr. chairman , today the house will consider h.r. 1461 , the federal housing finance reform act of 2005 . 
this legislation creates a world-class regulator for the housing government-sponsored enterprises , or gses , fannie mae , freddie mac , and the federal home loan banks . 
last may , the committee on financial services overwhelmingly approved h.r. 1461 by a vote of 65 to 5. we have worked a long time on gse regulatory reform . 
since the 106th congress , we have had over 20 hearings and received testimony from more than 100 witnesses on gse-related matters . 
capital markets subcommittee chairman baker has worked hard on these issues for many , many years . 
he should be commended for his many efforts . 
i also want to thank housing subcommittee chairman ney for taking a leadership role in developing the housing goals and affordable housing fund sections of the bill , as well as our ranking member , mr. frank , for his constructive input on many of the bill 's key provisions . 
the gses are among the largest financial institutions , with $ 2.5 trillion in assets . 
fannie mae and freddie mac own or guarantee nearly half of the residential mortgage market . 
eight thousand banks , thrifts , and credit unions have $ 550 billion in loans from the 12 federal home loan banks . 
for decades the gses have served the housing finance system well . 
we have heard from some that congress should be cautious in creating a gse regulator and mindful not to harm the housing market . 
however , we are here today largely because we have learned over the past 2 years about multiple accounting violations and widespread corporate mismanagement by the gses , resulting in billion-dollar earnings restatements . 
this has brought to light the fact that current gse regulators lack many of the supervisory and enforcement powers bank regulators currently have . 
h.r. 1461 will remedy this troublesome situation by consolidating gse regulation and providing all of the tools needed to oversee these huge , complex institutions . 
it is time for a new gse regulator who can prevent problems from developing and take swift action if the problems arise , thus ensuring that the housing market and financial system remains strong . 
some believe that the gses should be more tightly controlled . 
federal reserve chairman greenspan has called for a mandatory reduction in their $ 1.5 trillion in mortgage portfolio holdings . 
he is concerned about the systemic risk posed by the gses , based on investor perception that gse debtholders are backed by the federal government . 
i do not take this concern lightly , nor the potential for any taxpayer financial liability . 
today ofheo can reduce a gse 's portfolio only if the company is already seriously undercapitalized . 
h.r. 1461 gives a new regulator broad discretionary authority to require portfolio adjustments depending on the circumstances at the time , even if the gse meets minimum capital standards . 
such action must be consistent with the gse 's safe and sound operations or mission , relying on the regulator 's expertise . 
h.r. 1461 strikes the right balance by fully empowering the gse regulator , while at the same time allowing the gses to pursue their mission in the housing market . 
specifically , the bill merges ofheo , fhfb , and part of hud into a new independent regulatory agency , the federal housing finance agency , to oversee the gses . 
it is funded by annual assessments on the gses , not subject to the congressional appropriations process . 
the agency is headed by a director appointed by the president and confirmed by the senate for a 5-year term . 
there are three deputy directors for divisions of enterprise regulation , federal home loan bank regulation , and housing . 
a housing finance oversight board advises the agency on overall strategies and policies , but has no executive authority . 
the board is comprised of the secretaries of the treasury and hud , two appointed members and the director as chairman . 
the agency 's director is authorized to determine minimum and risk-based capital standards , review and adjust portfolio holdings , approve new programs and business activities , establish credential management and operation standards , take prompt corrective and enforcement actions , put a critically undercapitalized gse into receivership , require corporate governance improvements , and hire examination and accounting experts . 
h.r. 1461 also greatly expands the affordable housing role of fannie and freddie . 
by charter , they must assist in providing mortgages for low- and moderate-income families . 
the bill includes new single-family and multi-family housing goals , duty to serve lower income markets and a new affordable housing fund with contributions from the enterprises . 
the bill establishes a fund to finance construction of houses for underserved people . 
it is modeled after the successful affordable housing program of the federal home loan bank system . 
fannie mae and freddie mac will manage programs funded by a percentage of their after-tax earnings , initially 3.5 percent , then 5 percent , or $ 450 to $ 650 million annually combined . 
in comparison , cbo estimated that in 2003 , gse status provided fannie mae and freddie mac a $ 20 billion federal subsidy , one-third of which was retained by stockholders and management , not passed through to borrowers . 
twenty-five percent of the gses ' contributions will go to the treasury department to help pay off refcorp , that is the old s & amp ; l bonds , with the remainder going to the fund . 
funds will be awarded through a competitive , transparent application process to for-profit builders , state , and local housing agencies and nonprofit organizations . 
this should result in fannie and freddie leading the market rather than lagging behind private sector lenders as hud has found in promoting affordable housing for underserved communities . 
moreover , a greater amount of the gse subsidy will go where congress intended . 
i intend to offer a manager 's amendment that includes a number of important changes to the fund , which i will specify at that time . 
mr. chairman , h.r. 1461 is of great importance to the safety and soundness of the housing mission of the gses , as well as to the stability of this nation 's housing and financial system . 
i urge members to support its passage . 
mr. chairman , i reserve the balance of my time . 
