Fannie and Freddie Rally story updated from 8:52 a.m. with closing share price and mention of Fairholme-backed group that wants to "preserve and strengthen" the GSEs.
NEW YORK ( TheStreet) -- Fannie Mac ( FNMA) and Freddie Mac ( FMCC) shares traded higher Tuesday following a delay in a vote on a bill from Sens. Tim Johnson (D., SC) and Mike Crapo (R., Idaho) to wind down the government sponsored entities (GSEs).
"There continue to be important discussions to build a larger coalition supporting the bill. While we have the votes to report the bill out today, Members of the Committee have asked for a brief delay to try to work out additional issues prior to a final vote," read a statement from Johnson, Chairman of the Senate Banking Committee.
Fannie Mae shares closed higher by 3.16% to $3.92 while shares of Freddie Mac were up by 2.32% to $3.97. Shares of the mortgage finance giants were up by more than 6% and 4% respectively shortly after the start of trading.
Though passage of the legislation out of the committee requires just 12 votes, analysts believe it will require at least 15 to force a vote by the full Senate. Even then, then likelihood of passage in the House appears slim, and the GSEs increasingly look like they could survive despite widespread calls from President Obama and many officials in more both major parties to wind them down.
"It is increasingly likely the debate over the mortgage finance system lasts into 2017," contends a report from KBW analyst Brian Gardner Tuesday. "By then there may be no political benefit from replacing the GSEs with a new mortgage finance system."
The movement to keep Fannie and Freddie alive got a further push Tuesday from a new group called United for American Homeownership, which announced itself with full page ads in The New York Times and The Wall Street Journal. The coalition, which includes the National Organization for Women, the National Consumer League and the National Black Chamber of Commerce, received "seed funding" from Fairholme Capital, which owns GSE shares and is fighting with the government to claim a share of profits in the entities.
Currently, all Fannie and Freddie profits are swept into the Treasury, the result of a contentious 2012 amendment to the government conservatorship of the GSEs. Some 20 shareholder lawsuits have been filed against the government, many of which focus on the 2012 amendment. Fairholme is among the plaintiffs.