Greenspan Urges Curbs on Fannie, Freddie By Kristin Roberts WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan on Wednesday told Congress it must curb the rapid growth of Fannie Mae and Freddie Mac to cut the risks the mortgage finance giants pose to the financial system, just as a U.S. regulator unveiled new accounting problems at Fannie. Despite tough words from the Fed chief and regulator, shares of Fannie Mae and Freddie Mac surged as investors decided, according to analysts, that Congress may be far from a bill and that any big change to the company's profit-driving business would be phased in over time. "It's not the slam dunk that people thought it would be," said Brian Gardner, associate in Keefe, Bruyette & Wood Inc.'s research department after Greenspan's testimony. "I thought this was a net positive" for the market, he said. Greenspan, appearing before the Senate Banking Committee, said regulation without specific growth restraints could actually worsen the dangers the companies pose. "World-class regulation, by itself, may not be sufficient and, indeed, might even worsen the potential for systemic risk if market participants inferred from such regulation that the government would be more likely to back GSE debt in the event of financial stress," Greenspan said. But Greenspan's push to place a specific limit of $200 billion on the profit-driving mortgage portfolios held by Fannie and Freddie has already been rejected by a key Republican in the U.S. House of Representatives who was widely expected to propose the most restrictions and toughest on the two companies. The portfolios together total some $1.5 trillion. Louisiana Republican Rep. Richard Baker proposed a bill Tuesday that would give a new, stronger regulator the authority to force Fannie and Freddie to cut their portfolios, but would not set strict limits. That, Baker said, could hurt the market. On the other side of Capitol Hill, Armando Falcon, director of Fannie's and Freddie's regulator, outlined a fresh series of accounting missteps at Fannie Mae, where problems identified so far may lead to a profit restatement of more than $11 billion.     Continued ... Quelle "Greenspan Urges Curbs on Fannie, Freddie" : reuters.com Main page for "Greenspan Urges Curbs on Fannie, Freddie"