House panel head sees May vote on Fannie, Freddie

By Corbett B. Daly

WASHINGTON (Reuters) – The House Financial Services Committee plans to vote in early May on a bill to wind down Fannie Mae and Freddie Mac within five years, Representative Spencer Bachus, the panel’s chair, said on Thursday.

That move would mark another shift in strategy among House Republicans about what to do with the two largest providers of funding for the $10.6 trillion U.S. residential mortgage market.

House Republicans earlier this week introduced a series of more targeted measures aimed at reducing the influence of the two firms without shutting them down entirely.

“We may let the other bills catch up … but there is no reason not to vote” on this wider bill, Bachus told Reuters, adding, “We don’t need a hearing on the comprehensive bill” before voting on it.

The comprehensive bill that would shut the two firms down within five years was introduced earlier this month by Texas Representative Jeb Hensarling, the fourth highest-ranking Republican in the House of Representatives,

The series of eight narrowly crafted bills unveiled earlier this week is designed to garner broader support than would likely be won with more sweeping legislation to shut down the government-controlled firms, particularly in the Democrat-led Senate.

Representative Scott Garrett, the New Jersey Republican who heads the subcommittee overseeing Fannie Mae and Freddie Mac, is leading the charge for the more targeted approach.

Included in the basket of bills are measures that would speed up the wind-down of the mortgage portfolios held by Fannie Mae and Freddie Mac, eliminate their affordable housing goals and raise the fees they charge to guarantee mortgages in an effort to make private capital more attractive.

Garrett has scheduled an April 5 vote in the subcommittee on his suite of bills, but the full committee would vote on Hensarling’s bill first, sometime after lawmakers return from Easter recess in early May, Bachus said.

Any measure would have to be approved by the full committee, then the full House and the Senate before it could be sent to President Barack Obama to be signed into law.

Arizona Senator John McCain, meanwhile, reintroduced on Thursday his companion version of the Hensarling bill. McCain introduced a nearly identical measure last year that was defeated on the Senate floor as part of last year’s rewrite of the rules of Wall Street.

McCain’s bill faces a steeper climb this time around. Alabama Senator Richard Shelby, a fierce critic of Fannie Mae and Freddie Mac and a co-sponsor of McCain’s bill last year, now wants to slow things down.

“Before we discuss solutions, I think … we should first clearly identify the problems we’re trying to solve,” Shelby said earlier this week, calling for a “time-consuming” study of the issues.

And Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, said his panel would move slowly on any changes to Fannie Mae and Freddie Mac.

Representative Barney Frank, who headed the House panel for four years until Republicans took control of the House in January, called the two-pronged approach “chaos.”

“It’s an effort to deal with the fact that they made a set of unrealistic promises that they cannot deliver on and they are trying to get out from under them,” Frank told Reuters, referring to repeated Republican criticism of him for not including Fannie Mae and Freddie Mac as part of last year’s overhaul of Wall Street.

House Republicans “don’t have the votes, I believe, for the Hensarling bill,” said Frank.

Bachus promised to count his supporters before calling a vote.

(Reporting by Corbett B. Daly; Editing by Leslie Adler)

House panel head sees May vote on Fannie, Freddie