Among the eight proposals are measures to raise guarantee fees the GSEs will charge for mortgage-backed securities they insure and to prevent the GSEs from offering any new products while they are under conservatorship or receivership.
The third bill calls for transparency within the GSEs, mandating that the Inspector General of the Federal Housing Finance Agency submit a report of the GSE’s activities at the end of each quarter. The report will include a range of subjects, including explanation of bonuses and compensation for executive officers.
A fourth bill calls for the repeal of the affordable housing goals for the GSEs, and a fifth bill would prohibit the GSEs from issuing any new debt without advance approval by the Secretary of the Treasury.
Another bill, introduced by Texas Representative Jeb Hensarling, calls for a faster increase of the annual reductions of the retained portfolios of Fannie Mae and Freddie Mac. The bill proposes to reduce the GSEs’ portfolios to $250,000,000,000 within five years.
A seventh bill proposes to amend the Securities Exchange Act of 1934, which would ensure that mortgages held or securitized by Fannie or Freddie are treated the same as other mortgages and asset-backed securities.
The eighth bill suspends the current compensation packages for the senior executives of Fannie and Freddie. Under the “Equity in Government Compensation Act of 2011,” senior executives at the GSEs would be paid in accordance with the rates of pay for senior executives in the executive branch of the federal government.
Rep. Scott Garrett (R-New Jersey) said the eight bills are the beginning of “very specific, very targeted bills to end the bailouts, protect the taxpayers and get private capital off the sidelines.”
He continued, “With the American taxpayers on the hook for $150 billion and counting, the bailout of Fannie and Freddie is already the most expensive component of the federal government’s intervention into the financial system. The culmination of our efforts will formally wind down the GSEs and return our housing finance system to the private marketplace.”
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