Hope of reviving the comatose effort to overhaul regulation of Fannie Mae and Freddie Mac during a lame duck session of Congress is flickering in the concept of “regulatory discretion” will make room for compromise on the controversial issue of caps on the investment portfolios of the government-sponsored enterprises. In a speech this week to the National Economists Club, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said current discussions about GSE reform are focused on...