April 7, 2011 (Jeff Alan)
The Capital Markets and Government Sponsored Enterprises Subcommittee approved the eight bills introduced by House Republicans designed to start winding down government mortgage giants Freddie Mac and Fannie Mae. The eight bills now advance to the House Financial Services Committee for approval and then to the House floor for vote.
The eight bills are part of an effort put forth by House Republicans to immediately begin reducing Freddie Mac and Fannie Mae’s role in the housing market and their exposure of taxpayers to bailouts. GOP lawmakers may ultimately introduce as many as 24 separate bills in their bid to substantially reduce the size of the mortgage giants in five years.
Provisions of the eight bills include:
– Require Freddie Mac and Fannie Mae to comply with new rules being formulated that will require private mortgage lenders to retain 5 percent of the credit risk for non-conforming Qualified Residential Mortgages (QRM) when packaged as mortgage-backed securities.
– Bar Freddie Mac and Fannie Mae from engaging in any new business activities while under conservatorship
– Require Freddie Mac and Fannie Mae to get Treasury Department approval before issuing any new debt
– Cut Freddie Mac and Fannie Mae’s combined $1.5 trillion mortgage portfolios to $400 billion over five years.
– Cut executive pay for Freddie Mac and Fannie Mae employees putting them in line with government pay scales
– Require Freddie Mac and Fannie Mae to increase fees to lenders in putting them more in line with what private lenders charge
– Give more authority to the inspector general of the Federal Housing Finance Agency (FHFA) to oversee the mortgage giants
– The repeal of Freddie Mac and Fannie Mae’s affordable housing goals
Subcommittee Chairman Garrett said, “The passage of these eight bills represents an important milestone in our ongoing effort to end the bailout of Fannie Mae and Freddie Mac, protect taxpayers from further losses and level the playing field so that the private sector can reenter the marketplace. I appreciate all of the effort my colleagues put into these bills and I look forward to working closely with them as we advance them through the full committee and then to the House floor.”
Tags: GSE, Freddie Mac, Fannie Mae, mortgage giants, mortgage lenders, executive pay cut, increased fees, inspector general, taxpayers, private sector
Committee on Financial Services