Republicans seek vote on future of Fannie, Freddie

WASHINGTON (Reuters) - A trio of senior Republican senators on Wednesday pushed to add changing the structure of U.S. mortgage finance giants Fannie Mae and Freddie Mac to a broader debate on the financial system.

Senators Richard Shelby of Alabama, John McCain of Arizona and Judd Gregg of New Hampshire introduced an amendment to require the government to relinquish its control of Fannie and Freddie within two years.

At the height of the financial crisis in 2008, former U.S. Treasury Secretary Henry Paulson took control of the two entities as mortgage losses mounted.

The plan to put them into "conservatorship" was meant to temporary, but more than a year and a half later, the Obama administration is only in the earliest stages of what could become a complete overhaul of the entire U.S. housing finance system.

"Fannie Mae and Freddie Mac are synonymous with mismanagement and waste and have become the face of 'too big to fail'," McCain said in a joint statement with Gregg and Shelby.

"The time has come to end Fannie Mae and Freddie Mac's taxpayer-backed slush fund and require them to operate on a level playing field," the former Republican nominee for the White House said.

Treasury Secretary Timothy Geithner has said he does not expect any congressional action on what to do with Fannie Mae and Freddie Mac before next year.

The Republican amendment would essentially end force the government to end the "conservatorship" within two years of the law's enactment, though that could be delayed an additional six months.

Post-conservatorship, the proposal would strip Fannie and Freddie of their mandate to promote affordable housing and would sharply reduce the government's role in mortgage finance.

It was not clear if the amendment would get a vote on the Senate floor. If it did, it might not garner enough votes to be added to the broader Wall Street reform bill being managed by Democrats.

The amendment also calls for placing Fannie Mae and Freddie Mac on the books of the federal government. The two entities have already tapped more than $125 billion from the U.S. Treasury and the Obama administration on Christmas eve lifted a cap to allow for unlimited losses if necessary.