Raising Fannie Mae's Shades

The world's largest home mortgage companies, Fannie Mae, and her cousin, Freddie Mac, deserve some sort of slap on the back for finally, in these post-Enron days, acting like other public companies.

Under pressure in Congress, they now register their common stock with the Securities and Exchange Commission (SEC) and file quarterly and annual statements.

"On a scale of 1 to 10, that's a seven in terms of a step forward for the two," says Rep. Chris Shays (R) of Connecticut. Indeed, and almost unbelievably, Fannie and Freddie were the only members of the Fortune 500 with such an exemption.

But the dominating housing giants have further to go to meet the market's demands for greater transparency in accounting. They have not relinquished another exemption – more disclosure of information on their own mortgage-backed securities. A bill introduced by Mr. Shays, and Rep. Ed Markey (D) of Massachusetts, calls for just that. Government-sponsored enterprises like Fannie and Freddie have trillions in such securities. They should be SEC-registered as well.

Remember, Fannie and Freddie still don't have to pay state and local taxes. Their bonds carry AAA ratings, even though they're not guaranteed by the US Treasury with anything more than a symbolic line of credit.

Insufficient regulatory oversight and more disclosure by Fannie and Freddie must be part of current economic reform efforts in Congress. A burst in the nation's housing bubble could fell these two giants, and leave taxpayers with billions, if not trillions, in debt.

As accounting scandals continue to come to light, Fannie and Freddie have a housekeeping opportunity of their own – to help shed more light on themselves to assist investors and the public. Such action can only help ensure their function as an enabler for low-income home-buyers.