Official says Several Years Needed for Fannie, Freddie Reforms

James Lockhart, the director of the Office of Federal Housing Enterprise Oversight, said Wednesday that a legislative fix to the problems that have plagued mortgage giants Fannie Mae and Freddie Mac will take several more years.

Lockhart said in a speech to an American Bar Association committee that while the companies have been working in recent years to clean up their accounting issues, Congress would need to step in to ensure against future accounting mishaps. At particular issue is the combined size of the two companies? holdings, some $1.5 trillion. Lawmakers and the Bush administration worry that severe problems at either company could have dire consequences on the economy as a whole.

“Fannie Mae and Freddie Mac are making progress in fixing their problems, but it is slower than they or we would like or expect,” Lockhart said. “It will take several more years. Remedial actions taken to date will help, but legislation is needed to make sure that these two companies do not falter again.”