Two leading Senate Republicans introduced legislation Thursday to stop taxpayer-funded bailouts of insolvent mortgage buyers Fannie Mae and Freddie Mac.
“Fannie and Freddie are synonymous with mismanagement and waste,” said Sen John McCain of Arizona, who along with Sen. Orrin G. Hatch of Utah, have sponsored the “GSE Bailout Elimination and Taxpayer Protection Act.”
The failures of the two government-sponsored enterprises, or GSEs, have cost taxpayers more than $150 billion.
The bill is identical to legislation filed in the House this month sponsored by Rep. Jeb Hensarling, Texas Republican.
“When history is written, Fannie and Freddie will be mother of all taxpayer bailouts,” Hensarling said.
The federal government seized control of the failing mortgage giants during the financial crisis of 2008, and has sought to use them to prop up the collapsed mortgage and housing markets.
Republicans and Democrats agree that dramatic reform is needed at Fannie and Freddie, but they disagree on how — and how fast — to accomplish that.
The GOP bill calls for government takeover of Freddie and Fannie to end in two years. And the companies’ government GSE charter would expire in three years, a move that would force them to conduct all new operations as fully private sector companies.
The legislation also would shrink the size of the companies by capping their maximum portfolio size at $700 billion, and gradually reducing the cap to $250 billion.
House Financial Services Chairman Spencer Bachus said he hopes to bring the bill up for a vote in the House after Congress returns from a two-week break in early May.