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Senators Draft Housing Finance Overhaul (New York Times)

New York Times
(3/11/2014 11:04 PM, Shaila Dewan)

Washington -- The top Democrat and Republican on the Senate Banking Committee said on Tuesday that they had agreed on a plan to overhaul the nation’s housing finance system and eliminate Fannie Mae and Freddie Mac, the mortgage giants that were bailed out by taxpayers in 2008.

The committee chairman, Tim Johnson, a Democrat from South Dakota, and Mike Crapo of Idaho, the ranking Republican, have come up with a compromise that provides an explicit government guarantee for mortgages, but only after private investors have taken the first losses. The plan would set up a new federal regulator, called the Federal Mortgage Insurance Corporation, to provide the guarantee and regulate the system.

“There is near unanimous agreement that our current housing finance system is not sustainable in the long term and reform is necessary to help strengthen and stabilize the economy,” Senator Johnson said in a news release. “This bipartisan effort will provide the market the certainty it needs, while preserving fair and affordable housing throughout the country.”