It looks like OFHEO does have the power to control the GSEs underwriting standards:
Commenting on the OFHEO Safety and Soundness regulation (12 CFR part 1720), MICA stated that OFHEO should,
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by regulation, bar the Enterprises from purchase of mortgages or mortgage-backed securities that exceed the 80% LTV. However, the Enterprises are already limited to the purchase of mortgages and
mortgage-backed securities that are similar in risk to those with an 80% LTV. Further, this proposal would not reduce regulatory burden,
which was the subject of this document.
So if OFHEO had/has the power to limit the GSEs from purchasing mortgages with an LTV > 80%, then what does it matter what the Congress says? And by the way, what does “similar in risk to those with an 80% LTV” mean? It sounds like OFHEO was allowing the GSEs to buy/guarantee mortgages with an LTV > 80%.
Anyhoo, I see the clip mentioned above as nothing more than a bunch of Congresspeople blowing hot air (they have no real power because the Presidentially-appointed director of the OFHEO is the only body that has the power to regulate the GSEs). It makes for great political theatre and it allows those Congressfolks to go back to their representatives and say “hey look, I stood up for you and tried to make it easier for you to get a mortgage.” But in reality, the Congresspeople have no real power as it was OFHEO (who’s director was appointed by the President) who implemented the very lax underwriting standards of the GSEs.
Now, I’ve done some real research that shows how Bush was mostly responsible for this housing bubble and crash. I look forward to responses from the Bush apologists that show me where I’m wrong. And no, I don’t want to see another Rush-Limbaugh-featured YouTube clip that shows a bunch of politicians with no power who were quoted out-of-context.
