WASHINGTON At the Thursday Senate Banking Committee meeting on the GSE reform bill Senator Jack Reed (D-RI) will introduce an amendment to require that Fannie Mae and Freddie Mac establish Affordable Housing Funds for the production, preservation and rehabilitation of housing for low-income families. Based on recent data, Fannie and Freddie would have contributed $630 million in 2002 and $950 million in 2003 to Reeds fund. The amendment requires Fannie Mae and Freddie Mac to contribute a percentage, 4.2 basis points, for each dollar of new business purchases to increase production of housing and mortgage loans for working families. New business purchases would include all mortgage, mortgage-backed security, and collateralized mortgage-backed securities purchases. Reed offered a similar amendment which was passed last year by the Senate Banking Committee. Reed stated, I support the underlying principal of this bill to create a strong regulator to oversee the safety and soundness of Fannie Mae and Freddie Mac. I also want to improve the bill by including a provision that invests a portion of Fannie Mae and Freddie Mac profits in building, preserving and rehabilitating affordable housing and supporting, financing and funding housing in underserved markets.But, Reed stated, I have a grave concern that the underlying bill, even with an affordable housing production provision, will do more damage than good. In the long term I am concerned that this bill will cripple Fannie Mae and Freddie Mac leaving them shell organizations unable to carry out their mission of promoting home ownership among working families.Today's affordable housing crisis is the result of market failure and federal government disinvestment in housing assistance for working families. I hope that this amendment will encourage a greater investment in the construction of housing for families who are pursuing the American dream of homeownership, Reed stated.