Dems could delay Fannie Mae overhaul
WASHINGTON — Six Democrats whose support is crucial to a Senate plan to replace government-owned mortgage firms Fannie Mae and Freddie Mac have decided they will not support the proposal without major revisions, dimming its chances of becoming law.
The six senators held a private meeting on Thursday and agreed that they would not support the bipartisan bill, which would replace the finance companies with a government re-insurer, according to three people familiar with the meeting. A lack of Democratic consensus scuttled plans last week to approve the bill by the Senate Banking committee.
The bill would establish a Federal Mortgage Insurance Corporation to provide insurance for mortgage-backed securities. It would allow banks to be an aggregator, guarantor, securitizer and lender of mortgages.
The six senators — Chuck Schumer of New York, Sherrod Brown of Ohio, Jeff Merkley of Oregon, Robert Menendez of New Jersey, Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island — agreed that the structure of the re-insurer seemed unworkable and the bill lacked sufficient support for affordable housing goals.
Senate Majority Leader Harry Reid has said the bill needs to attract more support from Democrats, who hold a slim majority in the chamber, before he will bring it to the Senate floor.