* Banking committee short of broad support leaders sought
* Bill could clear panel, but full Senate vote unlikely
* Not clear when committee may vote on measure
* Bill would shutter Fannie Mae and Freddie Mac
(Adds background, Fannie Mae and Freddie Mac stock prices)
By Margaret Chadbourn
WASHINGTON, April 29 The already dim prospects
for a bill to wind down taxpayer-owned mortgage financiers
Fannie Mae and Freddie Mac grew darker on
Tuesday, as a U.S. Senate committee postponed a vote on the
The decision reflects the difficulty the panel's leaders are
having rounding up the broad backing that would be needed for
the measure to be brought to a vote in the full Senate.
"There continue to be important discussions to build a
larger coalition," Committee Chairman Tim Johnson said.
Johnson, a Democrat, and the panel's leading Republican,
Mike Crapo, have been trying to thread a needle to win support
from Democrats worried about loan availability and Republicans
wary of government involvement in the market.
Six Democrats and six Republicans on the 22-member committee
are prepared to back the bill, but the leaders want a broader
base to pressure Senate Majority Leader Harry Reid to let the
legislation come up on the Senate floor.
"The longer Congress avoids acting on mortgage finance
legislation, the greater the chances the two companies
survive," said Brian Gardner, senior vice president at Keefe,
Bruyette & Woods Inc. "It is increasingly likely the debate ...
lasts into 2017."
The bill would replace the two mortgage firms with an agency
that offers a government guarantee on home loans, but one that
only kicks in after private interests absorb big losses.
It aims to preserve the 30-year fixed rate loans that are at
the heart of the nation's mortgage system, while protecting the
taxpayers who bailed out Fannie Mae and Freddie Mac in 2008. The
companies are the two biggest sources of U.S. mortgage funds.
Even if the bill cleared the panel and the Democrat-led
Senate, it would still need to be reconciled with any
legislation the Republican-controlled House of Representatives
might produce. The most likely House measure would scale back
the government's involvement much more sharply.
Many conservatives blame Fannie Mae and Freddie Mac for
fostering the loose lending that sparked the financial crisis,
and want to do away with government mortgage guarantees.
While there is almost no chance of a bill being enacted this
year, heavy backing for the Senate legislation in the banking
committee would set a marker for future negotiations.
The Obama administration mounted a strong push for passage
of the bill, and has stepped up those efforts in recent weeks to
defend the plan against a myriad of attacks from outside groups.
Senator Bob Corker, a Tennessee Republican who introduced
similar legislation last year, said the panel had a "solid
majority" but required more time to bridge existing divides.
"There's going to be more discussion and we're going to see
where it goes," Corker said.
Efforts to secure more votes are focusing on Democrats who
worry the bill would increase borrowing costs for younger and
minority homebuyers, a concern shared by housing and civil
If the Senate does not vote before a summer recess in July,
the bill will likely die.
"While I do not relish the idea of a short delay, I am
pleased that a number of senators believe with just a brief
period of additional time to consider it, they will have the
opportunity to productively join us," Crapo said.
Chartered by Congress to provide liquidity for loans, Fannie
Mae and Freddie Mac buy mortgages from lenders and package them
into securities that they sell to investors with a guarantee.
The companies ran into trouble when the housing bubble
burst. They absorbed $187.5 billion in taxpayer funds but have
returned to profitability and have paid the Treasury more in
dividends for the government's controlling stake than they
received in aid.
Some private shareholders have sued the government over
bailout terms that prevent the companies from buying back the
government's shares, and conservative groups want them to
receive a portion of profits if the two are liquidated.
The committee's decision to postpone action lifted the
companies' shares. Freddie Mac's common stock climbed more than
3.9 percent to $4.03, while Fannie Mae's gained 4.5 percent to
$3.97. Preferred shares in the firms also rose
(Reporting by Margaret Chadbourn; Editing by Chizu Nomiyama and