The Associated Press

WASHINGTON - Mortgage giants Fannie Mae and Freddie Mac could pose a threat to the country's financial system if their ability to take on new debt is not restrained, Federal Reserve Chairman Alan Greenspan said Tuesday.

Greenspan lent his influential voice to calls for reforms in the operations of the two government-chartered companies which dominate the multitrillion-dollar mortgage industry.

Speaking Tuesday to the Senate Banking Committee, Greenspan said he supports creation of a tough new government regulatory agency to supervise the two corporations, saying the new regulator should have similar powers to federal banking regulators.

Fannie and Freddie, both Fortune 500 companies, have grown into two of the biggest financial companies in the world. They stand behind $4 trillion in home mortgages, or more than three-fourths of the single-family mortgages in the United States.

Greenspan stressed that this portfolio does not represent a risk to the financial system now, but he warned that it could down the road if the explosive growth in debt held by the government-sponsored enterprises is not restrained.

Committee Chairman Sen. Richard Shelby, R-Ala., told Greenspan that he was making creation of a new regulator for the two institutions and the Federal Home Loan Bank System a top priority this year.

Fannie Mae and Freddie Mac have been under increased scrutiny since an accounting crisis at Freddie Mac came to light last spring.

In statements Tuesday, the two agencies took issue with Greenspan's recommendations.

Fannie Mae senior vice president Jayne Shontell said the company appreciated that Greenspan had made it clear "that his concerns are not about some imminent problem. We, of course, disagree with most of his conclusions."

Freddie Mac president Chairman Dick Syron said that "the United States remains the only nation where a 30-year, prepayable mortgage is broadly available and this is in large measure because of Freddie Mac and Fannie Mae."