WASHINGTON (AP) — The White House welcomed bipartisan
legislation to overhaul the nation’s mortgage financing system that
cleared a crucial Senate hurdle on Thursday. The legislation would wind
down the giant government-backed lenders Fannie Mae and Freddie Mac.
The Senate Banking Committee voted 13-9 to send the bill to the Senate floor. It still faces long odds to
pass this year.
The
bill would phase out Fannie and Freddie and reduce the government’s
role in guaranteeing mortgage securities. The two firms had to be
rescued by a $187 billion taxpayer bailout during the financial crisis. A
House Republican bill would go further in privatizing the mortgage
market.
"Today’s vote marks important progress toward completing
one of the biggest remaining pieces of post-recession reform of the
financial system," White House press secretary Jay Carney said in a
statement.
The legislation has been in the works for some time and
is built on a proposal first advanced by Democratic Sen. Mark Warner of
Virginia and Republican Sen. Bob Corker of Tennessee.
The bill
would create a new Federal Mortgage Insurance Corp. that would provide
backstop insurance, available only after a substantial amount of private
capital is used up. Investors would pay insurance fees to the
corporation while agreeing to put a substantial amount of their own
capital at risk.
Some civil rights and consumer groups maintain
that the government should play a larger role to ensure a steady amount
of credit is available to potential homebuyers.