GOP Senators Join Efforts to End Fannie, Freddie
Sens. John McCain, R-Ariz., and Orrin Hatch, R-Utah, proposed a bill Thursday that would phase out government-sponsored enterprises Fannie Mae and Freddie Mac in five years or privatize them.

The bill comes on the heels of several similar Republican bills that have been proposed in the House.

While the proposed bill calls for Fannie and Freddie to be dismantled, 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.

Fannie and Freddie, as well as other federal agencies, 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 says.

McCain's bill is similar to the one proposed in the House by Rep. Jeb Hensarling, R-Texas. Earlier this week, House Republicans also introduced eight smaller bills that take a “bite-sized approach” to winding down the GSEs.

The National Association of REALTORS® urged Congress this week to not move too fast in reforming Fannie Mae and Freddie Mac.

“NAR strongly agrees that the existing system failed and that reforms are needed. However, redesigning a viable secondary mortgage model that will protect taxpayer dollars and serve the country’s home owners today, and in the future, can only be achieved through a methodical, measured effort,” 2011 NAR President Ron Phipps said in testimony before the House Subcommittee on Capital Markets this week.

“REALTORS® agree that increasing private capital in the mortgage finance market is necessary for a healthy market and for reducing the government’s involvement. 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.”

Read more about NAR’s position.

Source: “Republicans Advance Effort to Kill Government-Run Housing Giants Fannie Mae, Freddie Mac,” Associated Press (March 31, 2011)