Nearly six years after the government rescued Fannie Mae and Freddie Mac, top members in the Senate and the White House agreed on a framework to wind down the mortgage giants and overhaul the nation's $10 trillion mortgage market, the Wall Street Journal reported today. The plan, by Senate Banking Committee leaders Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), calls for replacing Fannie and Freddie with a new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered. Even though top Democrats and Republicans on the Senate panel have reached an agreement, a full Senate vote isn't assured, and there is even less certainty that members in the House will go along. There is deep unease among House Republicans to maintaining a significant federal backstop for the U.S. mortgage market. Congress will also be less likely to take up a bill as November's midterm elections draw closer, leaving less time for debate.
