UPDATE 2-US House panel head sees May vote on Fannie, Freddie

(Adds McCain bill, Shelby comments, Frank comments)

By Corbett B. Daly

WASHINGTON, March 31 (Reuters) – The U.S. House Financial
Services Committee plans to vote in early May on a bill to wind
down Fannie Mae (FNMA.OB: Quote, Profile, Research) and Freddie Mac (FMCC.OB: Quote, Profile, Research) 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)

UPDATE 2-US House panel head sees May vote on Fannie, Freddie