U.S. Sens. John McCain, R-Ariz.; Richard Shelby, R-Ala.; and Judd Gregg, R-N.H., have introduced an amendment to the financial bill that, if enacted, would place a two-year limit on the conservatorship of Fannie Mae and Freddie Mac.
If, at the end of the conservatorship, a government-sponsored enterprise (GSE) is considered less than financially viable, the Federal Housing Finance Agency would place the company in receivership and dissolve it. A financially viable GSE, on the other hand, would be allowed to re-enter the market, albeit under new operating restrictions.
The senators' amendment – dubbed the GSE Bailout Elimination and Taxpayer Protection Amendment – is in response to repeated Republican calls for financial reform legislation to address the GSEs.
Â "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 statement. "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 amendment would also repeal the affordable-housing goals mandate for the GSEs post-conservatorship, require the companies to shrink their mortgage-asset portfolios, and rework conforming loan limits and minimum down-payment requirements.
While the companies remain in conservatorship, the federal funding limit of $200 billion per institution would be reinstated. The companies would also be included in the federal budget for as long as they are under conservatorship or receivership.
SOURCE: Office of Sen. John McCain