In what's easily the strangest news item of the week, Reps. Chaffetz (R-UT) and Issa (R-CA) are demanding answers about a patent issued to Fannie Mae for a cap and trade style residential emissions trading system. What does a purchaser and guarantor of mortgages want with carbon emissions? That's what they're trying to find out.

Their press release says:

On June 7, 2005, the U.S. Patent and Trademark Office (USPTO) issued Patent No. 6,904,336 for a "System and Method for Residential Emissions Trading." The patent was assigned to the Federal National Mortgage Association ("Fannie Mae") and, LLC of New York. The patent lists former Fannie Mae Chairman and Chief Executive Officer Franklin D. Raines as the primary inventor. Former Fannie Mae executives Scott Lesmes and Robert Sahadi are also listed as inventors.

Well at least now we know Fannie was doing instead of making sure its mortgage portfolio could withstand a housing downturn: it was trying to find a way to capitalize off the future of environmental regulation. Was it trying to devise some scheme to create a market to sell carbon emissions credits of the homes it guaranteed? That's certainly how it appears.

Of course, this has nothing to do with its housing market mission, so perhaps Fannie was just trying to diversify its business. Since it still owns the patent, expect to see it lobbying for cap and trade legislation that could allow a new market to thrive. With Congress refusing to draw any new regulatory guidelines for the firm's activities, anything could happen.

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