By Nick Timiraos
A Senate committee approved a bipartisan measure to overhaul
Fannie Mae and Freddie Mac on Thursday, a first step in what is
shaping up to be a yearslong debate over revamping the nation's $10
trillion mortgage market.
The measure won support from 13 of 22 lawmakers on the Senate
Banking Committee, with seven Republicans joining six
Democrats.
While the bill is supported by the White House, analysts said
Thursday's vote figures to be a hollow victory because it fell
short of the larger majority needed to compel Senate Majority
Leader Harry Reid (D., Nev.) to bring the bill up for a floor vote
ahead of November's midterm elections.
The bill, sponsored by Sen. Tim Johnson (D., S.D.), the
committee's chairman, and Sen. Mike Crapo of Idaho, the panel's top
Republican, would construct a new market system in which private
investors would take initial losses on mortgage securities that
would carry government reinsurance.
A bipartisan consensus that the government needs to play a
significant role to ensure the wide availability of the popular
30-year, fixed-rate mortgage has hardened over the past year. The
overhaul proposal marked an rare instance in which leaders of both
parties have worked together and with the White House on an issue
that Washington had largely avoided in the years following the
companies' 2008 taxpayer rescues.
(More to come.)
Write to Nick Timiraos at nick.timiraos@wsj.com