On Thursday, Sens. John McCain, R-Ariz., and Orrin Hatch, R-Utah, proposed a bill that would phase out government-sponsored enterprises Fannie Mae and Freddie Mac in five years or privatize them. The bill comes after several similar Republican bills that have been proposed in the House.
The senate bill also calls for the GSEs to take steps such as charging higher fees and decreasing the size of their mortgage portfolios so that private banks can step up to take on a bigger piece of the mortgage market.
Along with other federal agencies, Fannie and Freddie backed about nine in 10 mortgages in the past year.
“Never again can we allow the taxpayer to be responsible for poorly managed financial entities who gambled away billions of dollars,” McCain said.
In testimony before the House Subcommittee on Capital Markets this week, National Association of Realtors president Ron Phipps urged Congress this week to heed caution in reforming Fannie Mae and Freddie Mac.
“Realtors agree that increasing private capital in the mortgage finance market is necessary for a healthy market and for reducing the government’s involvement,” he said. “However, proposed legislation that relies only on private capital to operate the secondary mortgage market will slow, if not stop, the housing and economic recovery.”
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