Report: Senators Sour on Reform Bill

Julie C. Nichols General

M Report – Tory Barringer

A recently unveiled plan to phase out Fannie Mae and Freddie Mac and overhaul the secondary mortgage market may have hit another snag, with six key senators reportedly deciding not to give their support. According to a report from Bloomberg, in a private meeting on Wednesday, Sens. Elizabeth Warren (Massachusetts), Charles Schumer (New York), Sherrod Brown (Ohio), Jeff Merkley (Oregon), Robert Menendez (New Jersey), and Jack Reed (Rhode Island)—all six of them Democrats—agreed they won’t support a bill proposed by Senate Banking Committee Chairman Tim Johnson (D-South Dakota) and Ranking Member Mike Crapo (R-Idaho) unless they’re able to make major changes during markup.

Taking cues from another piece of legislation authored last year by Bob Corker (R-Tennessee) and Mike Warner (D-Virginia), the Johnson-Crapo proposal would wind down and eventually eliminate Fannie and Freddie, transferring their functions to a newly created government corporation intended to provide insurance for mortgage-backed securities when losses exceed a 10 percent barrier put up by private investors. Citing reports from “three people familiar with the meeting,” Bloomberg says the six committee members agreed that the planned structure for the new corporation “seemed unworkable” and that the proposal lacked adequate support for affordable housing goals. A committee vote on the bill was already postponed in late April after two senators indicated they would be opposed to pushing the proposal forward, with the other four saying they were undecided.

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