A prominent House Republican declared his solidarity with the Bush administration’s proposa to shrink the mortgage holdings of Fannie Mae and Freddie Mac.

"I think we’re moving in that direction," Rep. Michael Oxley (R., Ohio), chairman of the House Financial Services Committee, said yesterday.

Mr. Oxley is co-sponsoring the legislation introduced recently by Rep. Richard Baker (R., La.) that calls for tougher regulatory oversight of the two government-sponsored enterprises that are currently supervised by the Office of Federal Housing Enterprise Oversight. Mr Oxley is opposing the idea to restrict the holdings of the two organizations through legislation.

Treasury Secretary John Snow said the government is not pushing for a limit on portfolios, but would like to give the regulator powers to shrink the company’s holdings to what is necessary to fulfill their role in the securitization process. Currently Fannie Mae and Freddie Mac have combined holdings of $1.5 trillion. Federal Reserve Chairman Alan Greenspan suggested downsizing them to $200 billion.