Senators Draft Plan to Abolish Fannie Mae, Shrink Backstop

Julie C. Nichols General

Bloomberg – Clea Benson

A bipartisan group of U.S. senators is putting the final touches on a bill that would liquidate Fannie Mae and Freddie Mac (FMCC) and replace them with a government reinsurer of mortgage securities behind private capital.

The legislation, written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner with input from other senators, is likely to be the first detailed blueprint reflecting a growing consensus in Washington that the U.S. role in mortgage finance should be limited to assuming risk only in catastrophic circumstances. It also reflects the prevailing view among lawmakers that the two government-sponsored enterprises should cease to exist, according to a discussion draft obtained by Bloomberg News.

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