WASHINGTON, July 11 A subcommittee in the U.S. House of Representatives will consider seven targeted bills on Tuesday aimed at limiting the taxpayer subsidy of mortgage finance giants Fannie Mae FNMA.OB and Freddie Mac FMCC.OB.
The piecemeal Republican-led effort is designed to attract more private capital to the $10.6 trillion U.S. residential mortgage market and eliminate the need for taxpayer dollars to prop up Fannie and Freddie, which were seized by the government in September 2008.
The subcommittee has already approved eight other Republican bills designed to reform Fannie and Freddie, which own or guarantee more than half of all U.S. home loans.
If approved by the subcommittee, the House Financial Services Committee must then vote on the separate bills in order for each measure to move to the full House. If approved on the floor of the House, each of the bills would need to be voted on by the Senate before they reach the president's desk to be signed into law.
While each bill is expected to be approved by the Republican-controlled House, their fate is uncertain in the Democrat-led Senate. The problems and costs of the government-sponsored enterprises were not addressed in the sweeping Wall Street reform legislation approved by Congress almost one year ago -- a point of contention for Republicans who have sharply criticized the Democratic bill for leaving the reform of Fannie and Freddie out of the final law.
The smaller bills being considered are part of a GOP strategy to keep public attention on Fannie and Freddie, whose government takeover has cost taxpayers more than $135 billion so far.
House Financial Services Committee Chairman Spencer Bachus said the panel is continuing to make progress on the Republican pledge "to end the bailout of Fannie Mae and Freddie Mac" and will consider related bills in the coming months as his GOP base works to lessen the government's role in the housing market.
Following is a summary of each of the seven bills the subcommittee will consider on Tuesday.
CAP ON FANNIE MAE, FREDDIE MAC'S AID
Representative Michael Fitzpatrick, a Pennsylvania Republican, sponsored legislation that would reestablish a cap on the amount of aid taxpayers can provide to Fannie Mae and Freddie Mac. The Treasury Department pledged in December 2009 to provide unlimited aid to Fannie and Freddie through 2012, lifting an earlier $200 billion level for each company. The bill specified the new cap to be the larger of the two amounts: either the funds Fannie and Freddie received from the government from 2010 to 2012, or $200 billion.
PAYING THE GOVERNMENT BACK
Fannie and Freddie pay a 10 percent dividend each quarter on senior preferred stock, a mandate designed to guarantee the government fully recoups the money it has invested in the two companies since they were placed in conservatorship. Representative Don Manzullo, an Illinois Republican, introduced a bill that would prevent the Treasury from ever lowering the 10 percent dividend.
LIMITS ON GSE LEGAL FEES
A bill sponsored by Representative Randy Neugebauer, a Texas Republican, aims to shield taxpayers from legal expenses of former Fannie Mae and Freddie Mac executives. The Federal Housing Finance Agency, which oversees the mortgage finance firms, estimates that more than $162 million has been spent since 2008 to defend Fannie, Freddie and their former top executives in lawsuits.
DISCLOSURE OF FANNIE, FREDDIE RECORDS
Representative Jason Chaffetz, a Utah Republican, sponsored legislation that would allow the public release of more information about Fannie and Freddie. His bill makes the case that since the two firms are now government-run, the public has a right to submit official requests for more information about their management details under the Freedom of Information Act.
ELIMINATING FUND FOR LOW-INCOME HOUSING
Representative Edward Royce, a California Republican, offered a bill that would eliminate the National Housing Trust Fund. The fund is used for the development of affordable housing and up until the GSEs were placed into conservatorship, was funded through a tax on the mortgage portfolios held by Fannie and Freddie.
A bill sponsored by Representative Robert Hurt, a Virginia Republican, would place limitations on Fannie and Freddie's book of business. The bill calls on the FHFA director to require Fannie and Freddie to dispose of all assets that are not critical to their housing finance mission.
REMOVING GOVERNMENT CHARTER
Representative Steve Stivers, an Ohio Republican, introduced legislation that gives FHFA the power to revoke Fannie and Freddie's charter and rejects the current government model for the mortgage firms by ensuring it is not recreated with future legislation. (Reporting by Margaret Chadbourn; Editing by Leslie Adler)