Snow Warns Fannie, Freddie Pose Threat By Kristin Roberts WASHINGTON (Reuters) - Mortgage giants Fannie Mae and Freddie Mac could threaten the economy if Congress fails to curb their investment activities, U.S. Treasury Secretary John Snow said on Thursday. In a second day of hearings before the U.S. Senate Banking Committee on the hot political issue of how to rein in government-sponsored enterprises, Snow told Congress to limit the size of the companies' mortgage portfolios, saying they are not needed to fulfill the core mission of supporting housing. What's more, their size and the interest rate risk they carry potentially threatens the financial system and the economy. "The risks undertaken by the GSEs, if not properly managed, may pose a threat to their solvency, the stability of the other financial institutions and the strength of our economy," Snow said in comments that often echoed Wednesday's testimony from Federal Reserve Chairman Alan Greenspan. Snow said Congress should phase in limits on the companies' portfolio activities in order to protect the markets. He also said the lines of credit the companies enjoy as part of their charter, and which he said markets falsely see as a sign that the government backs GSEs' debt, would only be used if a GSE were in "significant financial distress." "Congress may wish to consider reforms in this area as well," Snow said in his prepared testimony. The Bush administration has twice in recent years torpedoed legislation aimed at beefing up oversight of the extensive companies on the grounds that the measures lacked teeth. Some lawmakers have already indicated that curtailing GSEs' mortgage portfolios may be disruptive to markets. The apparent disagreement between some lawmakers and the White House may set the stage for a protracted struggle over precisely how to impose controls over the huge mortgage lenders that most agree in principle are needed. Earlier this week, a key House Republican, who was widely expected to propose the toughest measures and stiffest regulation of the companies, left out provisions to impose strict limits on portfolio activities. His bill would give a new regulator power to order the companies to cut their portfolios, but not require it.     Continued ... Quelle "Snow Warns Fannie, Freddie Pose Threat" : reuters.com Main page for "Snow Warns Fannie, Freddie Pose Threat"