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Republicans To Discuss End of Fannie, Freddie Control
12:29p ET February 2, 2011 (Dow Jones)
Republicans To Discuss End of Fannie, Freddie Control

By Alan Zibel
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--House Republicans plan to start discussing how to end the government's control of mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC).
Rep. Scott Garrett (R., N.J.) said Wednesday that a subcommittee hearing scheduled for Feb. 9 will focus on steps to end the federal control of the two mortgage-finance companies, which were placed into a government conservatorship in September 2008. Their rescue has cost taxpayers about $134 billion so far.
"Congress must take immediate measures to minimize this cost and ensure taxpayers are never put in this situation again," Garrett said in a statement. "The status quo is unacceptable, which is why we will continue to seek alternative solutions to housing finance in the United States that decrease the government's exposure and get private capital off the sidelines."
Garrett is chairman of the House Financial Services Committee's subcommittee overseeing capital markets, which will oversee Republicans' efforts to reshape the mortgage system.
Fannie and Freddie buy mortgages, package them into securities and sell them to investors with a guarantee against default. They have helped ensure that home loans are still available despite the housing market's bust.
A Treasury Department report on the future of the mortgage giants is expected to be released this month. It is likely to contain several options for what should replace Fannie and Freddie, and discussions of the merits and drawbacks of those approaches.
Republicans say President Barack Obama's administration has been unwilling to tackle the thorny issue.
"Just because the administration is not prepared to act on (Fannie-Freddie) reform does not mean that House Republicans will not take action," said Rep. Spencer Bachus, (R., Ala.) chairman of the financial services panel.
While many Republicans say they favor a mortgage system that runs without government support, lobbyists for bankers, real-estate agents and home builders say the government still needs to play a role in providing a guarantee for mortgage-backed securities.

-By Alan Zibel, Dow Jones Newswires; 202-862-9263; [e-mail]

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