WASHINGTON The U.S. House of Representatives will likely approve major legislation revamping the way Americans finance their homes by year's end but Senate action is less certain, a key Republican lawmaker said on Monday.
Rep. Scott Garrett, who chairs the House panel overseeing mortgage finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), told the Reuters Future Face of Finance Summit he expected his newly empowered Republican colleagues to approve a measure overhauling the structure of the Government-Sponsored Enterprises (GSEs) by the end of 2011.
"I would say that you would see GSE reform during the course of this year and what happens in the Senate is always a question mark," Garrett said.
Rep. Jeb Hensarling of Texas, the fourth-highest Republican in the House, told the Summit he plans to reintroduce legislation in weeks or months that would wind down Fannie Mae and Freddie Mac within five years.
The Obama administration earlier this month unveiled three long-term options for changing the structure of U.S. housing finance, though it did not endorse any of them. All three would make it harder to obtain a mortgage.
Treasury Secretary Timothy Geithner said he hoped Congress and the administration could hammer out legislation within two years, though he cautioned against moving too quickly.
"While we are confident that the steps we have laid out follow the right path, haste would be counterproductive -- possibly destabilizing the housing finance market or even disrupting the broader recovery," Geithner said in prepared remarks to be delivered on Tuesday before the House Financial Services Committee.
Geithner's appearance before the House panel is the first time lawmakers will have a chance to question the Treasury chief since the proposals were unveiled and could shed some light on lawmakers thinking.
"We continue to believe that there is not enough support in the Senate to eliminate Fannie and Freddie," said Jaret Seiberg, an analyst with MF Global Inc in Washington.
"Our interest this week is what key Democrats such as Senator Tim Johnson of South Dakota, Representative Barney Frank of Massachusetts, Senator Jack Reed of Rhode Island and others say about the government's investment in the enterprises and what should happen to it," Seiberg said.
Fannie Mae and Freddie Mac have taken more than $134 billion in direct taxpayer aid since they were seized in 2008 amid mounting losses from unpaid mortgages.
The government, through Fannie Mae, sister firm Freddie Mac, and the Federal Housing Administration, is now backing almost nine in 10 new mortgages.
The Obama administration also announced several short-term steps to make those government-backed mortgages more expensive going forward in a bid to lure private capital back to the mortgage market.
"The administration is committed to a system in which the private market-subject to strong oversight and strong consumer and investor protections-is the primary source of mortgage credit," Geithner said in his testimony.