Despite the fact that Fannie Mae and Freddie Mac have been bailed out to the tune of $145 billion (and counting!), talk of reforming the Government Sponsored Entities has been largely absent from the financial reform debate. Congress probably doesn’t want too much scrutiny for their role in directing the two GSEs to adopt rules that effectively nationalized the mortgage industry with disastrous consequences.
Well, now three GOP senators are finally trying to raise the issue and restore some sanity to the mortgage market:
Senators Richard Shelby of Alabama, John McCain of Arizona and Judd Gregg of New Hampshire introduced an amendment to require the government to relinquish its control of Fannie and Freddie within two years.
At the height of the financial crisis in 2008, former U.S. Treasury Secretary Henry Paulson took control of the two entities as mortgage losses mounted.
The plan to put them into “conservatorship” was meant to temporary, but more than a year and a half later, the Obama administration is only in the earliest stages of what could become a complete overhaul of the entire U.S. housing finance system.
“Fannie Mae and Freddie Mac are synonymous with mismanagement and waste and have become the face of ‘too big to fail’,” McCain said in a joint statement with Gregg and Shelby.
“The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field,” the former Republican nominee for the White House said.