BusinessJournal (01/17/2013):"BIPARTISAN GROUP WANTS SLOW DEATH FOR FANNIE MAE, FREDDIE MAC"
A bipartisan group of senators on Tuesday introduced the Housing Finance Reform and Taxpayer Protection Act that would wind down federal housing giants Fannie Mae and Freddie Mac within five years and replace them with a new system to guarantee home loans.
Sponsors include Kay Hagan (D-N.C.), Bob Corker (R-Tenn.), Mark Warner (D-Va.), Jon Tester (D-Mont.), Mike Johanns (R-Neb.), Jerry Moran (R-Kan.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.) and Mark Kirk (R-Ill.).
“For too long, Congress has ignored our broken housing finance system,” Hagan said in a statement. “It is time we come together, Democrats and Republicans, to resolve this problem. This bipartisan bill provides an important road map for strengthening our housing finance system and protecting taxpayers while ensuring access to affordable, long-term mortgages for consumers.
“I look forward to working with my colleagues to advance this bipartisan legislation that will put our housing finance system on a stable path.”
The bill would replace Fannie and Freddie with a new government agency, funded by the financial industry, that would offer insurance on approved home loans.
Currently, Fannie and Freddie are in government conservatorship after they faltered in the housing collapse of 2008. They have received more than $188 billion in taxpayer aid, which is being repaid from profits as the housing market rebounds.
“Fannie Mae and Freddie Mac continue to dominate the housing market — guaranteeing nine out of every 10 mortgages made today,” Hagan's office says in a press release. “Despite this unsustainable situation, real reform to the housing finance has not happened since the financial crisis.”
According to Hagan, the new legislation would accomplish the following:
•Mandate 10% capital, upfront, for the system to protect taxpayers against future bailouts.
•Wind down Fannie Mae, Freddie Mac and the Federal Housing Finance Agency within five years of bill passage.
•Transfer appropriate utility duties and functions to the modernized, streamlined and accountable Federal Mortgage Insurance Corp., modeled in part after the FDIC.
•Establish a transparent and accountable market access fund that focuses on maintaining access to affordable rental housing, making grants to state housing agencies and conducting borrower counseling programs at the state and local level.
•Ensure institutions of all sizes have direct access to the secondary market so local banks and credit unions aren’t gobbled up by the mega banks when Fannie and Freddie are dissolved.
AI
