Key Senators Agree On Plan To Replace Fannie Mae, Freddie Mac

Source: Jim Puzzanghera / Los Angeles Times

WASHINGTON — Congressional efforts to shut down bailed-out Fannie Mae and Freddie Mac took a significant step forward Tuesday as key senators announced bipartisan agreement on a plan to overhaul the housing finance system.

The proposal, which will be detailed in the coming days, would slowly shrink the companies and replace them with a scaled-back government guarantee for mortgages.

Fannie Mae and Freddie Mac were seized by the federal government in 2008 as they neared bankruptcy from bad loans they guaranteed during the subprime housing boom.

Senate Banking Committee Chairman Tim Johnson (D-S.D.), and the panel’s top Republican, Mike Crapo of Idaho, said they had reached agreement after a series of hearings last year on how to overhaul the complex housing system and reduce the role of the federal government in backing home loans.

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