clear
Saturday September 5th, 2015 6:22AM

2 key senators agree on Fannie-Freddie overhaul

By The Associated Press
WASHINGTON (AP) - A plan to phase out government-controlled mortgage giants Fannie Mae and Freddie Mac and instead use mainly private insurers to backstop home loans has advanced in Congress.

The agreement by two key senators and a White House endorsement sent shares of Fannie and Freddie sinking Tuesday. Fannie stock fell $1.79, or more than 30 percent, to $4.03. Freddie dropped $1.48, or 26.8 percent, to $4.04.

The plan by Sen. Tim Johnson, D-S.D., chairman of the Banking Committee, and Sen. Mike Crapo of Idaho, its senior Republican, would create a new government insurance fund. Investors would pay fees in exchange for insurance on mortgage securities they buy. The government would become a last-resort loan guarantor.

President Barack Obama proposed an overhaul of Fannie and Freddie last year, but Congress has struggled to craft legislation. The government rescued the two mortgage giants at the height of the financial crisis in September 2008 with a $187 billion bailout, which they have repaid.

The senators' proposal ``represents a good-faith compromise,'' Bobby Whithorne, a White House spokesman, said in a statement. ``We support this effort and believe it is a workable bipartisan approach to complete the biggest remaining piece of post-recession financial reform.''

As the housing market has gradually recovered and made Fannie and Freddie profitable again, they have repaid their government loans as dividends each quarter. Those repayments helped shrink last year's budget deficit to the smallest gap in five years.

The idea behind the overhaul plan is to shift more mortgage financing risk from the government to the private sector to prevent taxpayers from having to pay for any future bailouts.

``There is near-unanimous agreement that our current housing finance system is not sustainable in the long term, and reform is necessary to help strengthen and stabilize the economy,'' Johnson said in a statement. ``This bipartisan effort will provide the market the certainty it needs, while preserving fair and affordable housing throughout the country.''

The Banking Committee is expected to vote on the proposal in coming weeks after Johnson and Crapo draft legislation. The proposal would then be sent to the full Senate.

A fight over the legislation is likely. Most Democrats, and an array of consumer and community groups, tend to favor a continued government role in supporting the mortgage market because they say it stabilizes the housing market. Many House Republicans, especially conservatives, say they want to end government involvement and let the free market rule.

In the House, the Republican chairman of the Financial Services Committee praised Johnson and Crapo ``for working hard and producing a reform plan, because the status quo is unacceptable.'' Their plan includes ``several common-sense provisions,'' said the chairman, Rep. Jeb Hensarling of Texas.

Still, he warned that the window of time for Congress to enact a housing finance overhaul during this legislative session ``is rapidly closing.''

Wall Street's biggest lobbying group, the Securities Industry and Financial Market Association, called the senators' proposal ``a positive development towards achieving the shared goal of establishing a more sustainable housing-finance system.''

Fannie and Freddie don't directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available and keeps the housing market running.

Combined, the two companies own or guarantee nearly half of all U.S. mortgages and 90 percent of new ones. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. This system helps free up more money to lend.
© Copyright 2015 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Judge denies motions to move, delay Tsarnaev trial
Lawyers for Boston Marathon bombing suspect Dzhokhar Tsarnaev asked a federal appeals court Wednesday to overturn a judge's decision to not move his upcoming trial out of state.
10:02PM ( 8 months ago )
High court to adopt electronic filing of cases
The Supreme Court is belatedly developing an electronic filing system similar to those used in courts around the country, Chief Justice John Roberts said Wednesday in his annual end-of-year report.
7:57PM ( 8 months ago )
Storm brings snow, cold to West for New Year's
A blustery winter storm dumped snow and ice across the West on Wednesday, making driving treacherous in the mountains from California to the Rockies and forcing residents and party-goers in some usually sun-soaked cities to bundle up for a frosty New Year's.
5:19PM ( 8 months ago )
U.S. News
State DOT awards $48M contract for NE Ga. road project
The state Department of Transportation has awarded a $47.8 million contract for nine miles of work on a northeast Georgia road.
9:37AM ( 8 months ago )
Business News
Grass fire impacts rush hour traffic on 985
Rush hour traffic on I-985 was slowed by a grass fire Wednesay afternoon with one lane closed while firefighters fought the blaze.
10:19PM ( 8 months ago )
Hall County conviction, sentencing to be reviewed by SCOGA
The State Supreme Court has agreed to hear the appeal of a Hall County man when they reconvene in January.
2:37PM ( 8 months ago )
Maysville man dies from Banks County wreck
The Georgia State Patrol reports that alcohol and/or drugs were factors a single-vehicle wreck that claimed the life of a Maysville man in Banks County Tuesday night.
11:07AM ( 8 months ago )
Local/State News
GOP leader regrets talk to white supremacists; party leaders rally around him
House Republican leaders rallied around one of their own, Whip Steve Scalise, on Tuesday after he said he regrets speaking 12 years ago to a white supremacist organization and condemns the views of such groups.
6:08PM ( 8 months ago )
Conviction of Putin foe sets off protest in Moscow
President Vladimir Putin's chief political foe was convicted along with his brother on Tuesday in a fraud case widely seen as a vendetta by the Kremlin, triggering one of Russia's boldest anti-government demonstrations in years.
6:03PM ( 8 months ago )
More Georgians signing up for health insurance
A federal report says more Georgians have selected health insurance plans through a federally facilitated marketplace.
4:16PM ( 8 months ago )
Politics
Week 2: Streaks continue, end for area teams
West Hall, Commerce, Lanier, and Jefferson all continued their winning ways in grand style while Buford saw its 42-game win streak come to a screeching halt on a Friday night of lopsided wins around northeast Georgia.
9:00AM ( 2 hours from now )
Sentencing handed down for two former Hall Co. Sheriff Office employees
Federal Judge Richard Story handed out two similar sentences in U.S. District Court in Gainesville Friday afternoon but called each case unique to itself.
6:41PM ( 11 hours ago )
More attempted political comebacks set for Nov. 3; Clermont special election likely in March
As the books closed on qualifying for the Nov. 3 city elections Friday,the number of former office-holders seeking a political comeback in northeast Georgia increased.
6:36PM ( 11 hours ago )
Hall deputies arrest suspect in 2014 molestation case
Acting on a tip, Hall County Sheriff's Office warrants deputies arrested a man this week, suspected of child molestation in 2012.
1:17PM ( 17 hours ago )
Alto man arrested for growing pot
An Alto man is behind bars after authorities say he tried to cut down and dispose of marijuana plants while authorities were searching for pot growers from a helicopter.
12:38PM ( 17 hours ago )