WASHINGTON Jan 19 Six Republican senators took
aim at the Obama administration's Christmas eve decision to
give mortgage companies Fannie Mae FNM.N and Freddie Mac
FRE.N unlimited access to a Treasury credit line.
The senators called on Senate Banking Committee Chairman
Chris Dodd to hold public hearings and scrutinize the decision
to turn the government-sponsored enterprises into "public
"The current status of the GSEs is untenable ... and we
feel that it would be irresponsible for the committee to fail
to investigate Treasury's drastic action with regard to what
could be the next chapter in our financial crisis," Senator Jim
DeMint of South Carolina wrote to Dodd, a Connecticut Democrat
who recently announced his decision not to seek re-election in
DeMint was joined by Kentucky's Jim Bunning, Nebraska's
Mike Johanns, Idaho's Mike Crapo, Utah's Robert Bennett and Kay
Bailey Hutchison of Texas.
On Dec. 24, the Obama administration announced it was
extending an unlimited credit line to mortgage finance agencies
Fannie and Freddie, which would keep them afloat no matter how
high their losses.
Many analysts and some lawmakers on Capitol Hill see the
move as a backdoor way to help banks.
Representative Dennis Kucinich, a Democrat who heads the
domestic policy subcommittee of the House Committee on
Oversight and Government Reform, has already called for an
The original bailout program, devised by former Treasury
Secretary Henry Paulson, was a plan to help the banks restore
their capital position by buying bad assets at and above market
The Treasury's announcement said the unlimited credit line
for the two government-controlled companies would be in place
through the end of 2012, weeks after President Barack Obama
would face voters if he seeks a second term.
The Treasury also said it was scrapping plans for the two
companies, which play a role in funding three-fourths of all
U.S. residential mortgages, to reduce the size of their
investment portfolios. The 2010 limits on their portfolios, in
fact, would allow their investment holdings to grow.
"In total, U.S. taxpayers are on the hook for more than $2
trillion of bailouts of Fannie Mae and Freddie Mac. This latest
action by the Treasury could make that number seem penny ante,"
the Republican senators wrote.
(Reporting by Corbett B. Daly; Editing by Kenneth Barry)