WASHINGTON, March 14 A bipartisan group of U.S.
senators on Thursday introduced a bill to prevent the government
from using fees collected by housing-finance giants Fannie Mae
and Freddie Mac to pay for other government
Aiming to prevent Congress from using them as a piggy bank,
the bill would prohibit increasing the "guarantee fee" that the
two government-owned firms charge lenders and in turn use the
funds generated to cover unrelated federal spending.
In a show of agreement on an issue where bipartisanship is
rare, the group of four senators sponsoring the bill said they
wanted to spur debate on how to reform the two so-called
government-sponsored enterprises, or GSEs.
Fannie Mae and Freddie Mac, which provide the financing for
about two-thirds of all new U.S. home loans, have soaked up $131
billion in taxpayer aid since being seized by the government at
the height of the financial crisis in 2008.
Republicans and Democrats agree the two firms should
eventually be wound down, but they have yet to resolve
disagreements over what should replace them and how extensive a
role the government should play in supporting housing.
"Reforming a broken housing finance system and protecting
taxpayers is a win-win, and we can begin that effort with this
bipartisan GSE reform proposal," Republican Senator David
Vitter, one of the co-sponsors of the legislation, said in a
"This bill shows that Republicans and Democrats do agree on
the urgency required to reform the mortgage finance system," he
Vitter is sponsoring the bill with fellow Republican Senator
Bob Corker and Democrats Elizabeth Warren and Mark Warner.
Other aspects of the measure would prevent the Treasury
Department from selling its preferred shares in the two firms
without permission from Congress and without progress on
structural housing finance reform.
"It is past time to reform Fannie and Freddie. That means
removing the obstacles and starting a bipartisan effort to take
on housing finance reform this Congress," Warren said in the
The two firms do not directly make loans. Instead, they
purchase mortgages from lenders, which they either keep on their
books or bundle into securities for sale to investors with a
guarantee. Those investors pay Fannie and Freddie a "guarantee
fee" when they buy the securities.
"We believe that as we transition Fannie and Freddie out of
their present roles, we need to think about the system in its
entirety. The guarantee fee should not be mixed with other
funding needs," said Warner.
Congress has attempted to tap the "g-fee" in the past. One
proposal, which failed, would have used the fees to fund cleanup
of Gulf Coast damage caused by the 2010 BP oil spill. The most
recent effort increased the fees to cover the cost of a
two-month extension of the payroll tax reduction at the end of
The regulator for Fannie Mae and Freddie Mac, the Federal
Housing Finance Agency, is already increasing the g-fees as part
of an effort to wind down the companies and lure private lenders
to enter the market.