Plan for Mortgage Giants Takes Shape

万得福

By Nick Timiraos
http://finance.yahoo.com/news/plan-mortgage-giants-takes-shape-003800649.html

The plan, by Senate Banking Committee leaders Tim Johnson (D., S.D) and Mike Crapo (R., Idaho), calls for replacing Fannie and Freddie with a new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered.

There is deep unease among House Republicans to maintaining a significant federal backstop for the U.S. mortgage market.

Other hurdles: Congress will be less likely to take up a bill as November's midterm elections draw closer, leaving less time for debate. Consumer and industry groups are sure to resist any steps to raise loan costs or limit mortgage access.

The forthcoming bill is modeled on a proposal last year by Sens. Bob Corker (R., Tenn.) and Mark Warner (D., Va.) that had attracted support from eight other committee members. Mr. Corker predicted Tuesday that the latest bill would be "solidly supported" in the committee.

Messrs. Johnson and Crapo didn't say how their bill would treat the company's private shareholders. The Corker-Warner proposal leaves little for those investors, and Mr. Corker said Tuesday that he believed the forthcoming bill wouldn't be any different.

Any bipartisan measure is likely to emerge from the Senate because House Republicans, without support from Democrats, have passed a separate proposal that would largely remove government-loan backstops. After advancing that bill through committee, House Republicans have struggled so far to secure enough votes for a full House vote.

Rep. Jeb Hensarling (R., Texas), the bill's sponsor and chairman of the House Financial Services Committee, said Tuesday that he was "skeptical of any approach that does not end the permanent government guarantee in the secondary mortgage market."