Republicans unveil bills targeting Fannie, Freddie

* Bills aim to chip away at Fannie, Freddie role

* Strategy aims to garner more support from Senate

* Process will take several years, not overnight

By Corbett B. Daly

WASHINGTON, March 29 (Reuters) – A group of influential
Republicans in the U.S. House of Representatives on Tuesday
unveiled eight bills aimed at chipping away at the dominant
role Fannie Mae (FNMA.OB: Quote, Profile, Research) and Freddie Mac (FMCC.OB: Quote, Profile, Research) play in the
$10.6 trillion U.S. mortgage market.

The series of narrowly crafted bills 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.

“Today marks the start of a process — a process to begin
winding down Fannie Mae and Freddie Mac,” Representative Scott
Garrett, a New Jersey Republican who is leading the effort,
said in a statement.

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, who chairs a subcommittee that oversees Fannie Mae
and Freddie Mac, said Republicans planned to unveil several
more targeted bills in coming months to lure private capital
back into the mortgage market.

Republicans, who hold a majority in the House, plan to push
the piecemeal approach to diminishing Fannie Mae and Freddie
Mac’s role in the housing market instead of pushing a broader
bill that would kill them within five years.

“We see this as a moderate approach that offers less risk
to sparking a housing finance credit crunch than a more
comprehensive legislative package,” said Jaret Seiberg, a
policy analyst at MF Global Inc in Washington.

LOOKING FOR SUPPORT

Some of the proposals laid out on Tuesday mirror measures
presented in a paper the Obama administration released last
month.

In that paper, the administration presented three options
for long-term changes to Fannie Mae and Freddie Mac and several
short-term recommendations for reducing the government’s role
in the housing market.

House Financial Services Committee Chairman Spencer Bachus
has scheduled an April 5 vote on the first round of incremental
measures. He told reporters on Tuesday that the changes would
not “happen overnight, but over several years.”

Fannie Mae and Freddie Mac are the two largest providers of
U.S. residential mortgage funds. They provide liquidity to the
market by buying mortgages from lenders and repackage them as
securities for investors, which they then guarantee.

They were also given a mission to help increase affordable
housing.

The Bush administration seized the two companies in
September 2008 as losses on loans they backed spiraled. They
have since been propped up with more than $134 billion in
taxpayer aid.

As credit contracted during the financial crisis, Fannie
Mae and Freddie Mac took on an ever-increasing presence in the
market. Through Fannie Mae, Freddie Mac and the Federal Housing
Administration, the government backs almost nine in 10 new
mortgages.

Democrats and Republicans alike agree the status quo in
housing finance cannot last, but they disagree on the amount of
support the government should continue to extend to the market.
Democrats generally back a larger government role than
Republicans.

In one of the bills outlined on Tuesday, Bachus, an Alabama
Republican, proposed paying workers at Fannie Mae and Freddie
Mac on the same scale as government workers. In late 2009, the
regulator of the firms approved pay packages that allowed the
top executives at each firm to receive as much as $6 million
each in annual compensation.

Representative Randy Neugebauer, a Texas Republican,
proposed a measure that would raise over two years the fees
Fannie Mae and Freddie Mac charge for their guarantee, a move
aimed at making private capital more competitive.
(Additional reporting by Kevin Drawbaugh; Editing by Dan
Grebler)

Republicans unveil bills targeting Fannie, Freddie