Taking a piecemeal approach to housing reform, House Republicans introduced a series of bills Tuesday to scale back Fannie Mae and Freddie Mac.
The lawmakers seek to move eight bills that would wind down the government sponsored enterprises while deferring the larger question of how to replace them.
The bills "try to address the fundamental problems — and that is to say, no longer should the federal government bail out these institutions, no longer should the taxpayer be put at risk," Rep. Scott Garrett, R-N.J., said at a news conference. The aim is to "bring the private market back into place."
The eight bills largely mirror proposals by the administration to wind down the GSEs but would do so at a quicker pace. The bills include a measure by House Financial Services Committee Chairman Spencer Bachus to suspend the current compensation system for Fannie and Freddie employees; a bill by Rep. Ed Royce, R-Calif., to permanently abolish the GSEs' affordable housing goals; one by housing subcommittee Chairman Judy Biggert to establish an inspector general within the Federal Housing Finance Agency; and a measure by oversight subcommittee Chairman Randy Neugebauer to phase in an increase of Fannie and Freddie's guarantee fees over two years.
Republicans also introduced a bill by Rep. Jeb Hensarling, R-Texas, to set annual limits on the size of each GSE's retained portfolio and increase the limits over five years.
"This is a part of a plan to return Fannie and Freddie to a competitive marketplace. … I think the most unreasonable thing we can do is leave Fannie Mae and Freddie Mac as they are," Hensarling said. "They should have never had these retained portfolios in the first place and anything to their housing mission. Five years is not an arbitrary number. But a lot of analysts I've spoken to are comfortable with that number."
Other legislation includes one by Rep. David Schweikert, that would prohibit Fannie and Freddie from engaging in new activities or businesses; a bill by Rep. Steve Pearce, R-N.M., to require the Treasury Department to approve any new debt issuance by the GSEs; and a measure by Garrett that would prohibit the GSEs from being exempt from a Dodd-Frank Act risk-retention proposal.
The capital markets subcommittee is schedule to hold a hearing on the proposals Thursday and cast votes next week.
"This comprehensive reform of the U.S. mortgage market will be supplemented by targeted bills which capital markets subcommittee Chairman Scott Garrett will shepherd through his subcommittee, all of which advance the same goal as the Hensarling bill: to create a well-functioning, private, competitive secondary mortgage market to price mortgages according to risk, be more innovative and efficient, and operate with less political interference," Chairman Bachus said.
