Fannie Mae and Freddie Mac could be replaced under new proposals

26 June 2013

The US-owned mortgage financiers Fannie Mae and Freddie Mac, both of which were rescued during the financial crisis, may become new government insurers after a bipartisan group of senators made new proposals.

Senators Bob Corker and Mark Warner will table the bill, which reflects the widespread view among policymakers that the two enterprises should cease to exist. The consensus is a federal role in backing mortgage lending should remain in place.

Mr Corker and Mr Warner held a news conference to introduce the measure yesterday (25 June). Four Democrats and four Republicans want to shut down Fannie and Freddie over five years

David Stevens, president and chief executive officer of the Mortgage Bankers Association, told Bloomberg: "There is a bipartisan effort here that’s thoughtful and it is without question the most thorough congressional effort to draft a GSE reform legislation to date."

The proposal will move the complicated process of deciding the fate of Fannie Mae and Freddie Mac forward, which has been welcomed by many.

By Claire Archer

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