This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fannie, Freddie Death Bill Long On Hope

WASHINGTON ( TheStreet) A bill to wind down Fannie Mae (FNMA) and Freddie Mac (FMCC), recoup taxpayer money spent on bailing out the mortgage giants and transition to full privatization of the U.S. mortgage industry in 10 years was introduced Friday by Senator Johnny Isakson (R-Ga.).

However, Isakson's plan includes major assumptions including the recovery of the housing market, a backstop with no federal subsidy and plan to eventually sell a new housing agency to the banks at a hefty profit.

Senator Isakson described The Mortgage Finance Act of 2011 as "a detailed roadmap to change the unsustainable course we're on in which the American taxpayers have been bailing out the mortgage industry to the tune of hundreds of billions of dollars."

In the draft bill, Senator Isakson proposes to place Fannie and Freddie into receivership within 18 months, with the receiver "required to maximize the repayment to taxpayers of the full amount of the bailout since 2008."

A new transitional Mortgage Finance Agency would be created, to operate as a government agency for a 10 year period, purchasing "high quality single family mortgages" from lenders, but also charging lenders "guarantee fees," or "g-fees," which would be actuarially "priced to capitalize a new catastrophic fund, to cover any losses, and, as the transition proceeds, to purchase supplemental insurance from the private-sector."

The g-fees would be uniform to all lenders, so as to "level the playing field and eliminate preferential fee arrangements."

Senator Isakson aims for the new catastrophic fund to be similar to the Federal Deposit Insurance Corp.'s deposit insurance fund, being entirely industry-funded and not requiring any additional federal money in the event of a wide scale housing disruption during the Mortgage Finance Agency's 10-year life.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $15.69 2.02%
C $51.16 2.57%
JPM $62.02 1.99%
WFC $52.41 2.24%
AAPL $110.78 0.36%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs