The regulator of U.S. mortgage giants Fannie Mae and Freddie Mac urged Congress Tuesday to approve a funding increase for his agency, saying additional staff and resources are necessary for proper oversight of the companies.

"This is what is necessary to have the potential for making sure the agency has the resources that are necessary to do its job," Office of Federal Housing Enterprise Oversight Director Armando Falcon said in a speech to Women in Housing and Finance.

Falcon's comments come amid lawmakers' debate over whether to boost spending for the oversight office as it investigates accounting issues at both companies.

In September, OFHEO issued a scathing report alleging widespread accounting manipulations at Fannie Mae The company has said it believes its accounting conformed to accepted practice and has defended its approach before the Securities and Exchange Commission.

Freddie Mac shocked markets in 2003 by revealing accounting problems that led it to replace five senior executives, restate earnings by $5 billion, and pay a $125 million civil penalty. Members of Congress criticized OFHEO for not addressing Freddie Mac's accounting problems more quickly.

Even so, House of Representatives lawmakers had been considering raising OFHEO's appropriation to $59.2 million in fiscal year 2005 from $39.9 million.

But But a senior Democrat, Massachusetts Rep. Barney Frank, earlier this month withdrew support for the funding increase, saying a Department of Housing and Urban Development investigation raised serious concerns about OFHEO's handling of the probe.

Also, the leader of the Senate panel that oversees OFHEO's funding, Missouri Republican Christopher Bond, has proposed withholding $10 million from the agency's funding until the departure of Falcon -- a holdover from the administration of former President Clinton.

Falcon said he is not deterred by political crosswinds from overseeing the companies finances.

"I've been in Washington awhile. It comes with the territory," he said.

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