Pressure Builds on GSEs

Two interesting excerpts from an FT article on Freddie Mac. I mentioned last week that Freddie's current regulator is trying to curb FRE's ability to expand its balance sheet until the company comes clean on last year's accounting picture. The FT reports that the Office of Federal Housing Enterprise Oversight (the office that produced the report on the GSEs and systemic risk) told the Senate last week that Freddie Mac, "remains exposed to "substantial management and operations risk." OFHEO has proposed that Freddie hold up to 30% more capital. The other itriguing revelation...is that Mark Brickell, the former J.P. Morgan managing director and derivatives expert, withdrew his nomination to become the director of the OFHEO and supervise the GSEs. The regulatory pressure is heating up in GSE-land...