Tags: US | Financial | Overhaul

Banks Fear Adding Fannie, Freddie to Bank Bill

Thursday, 24 Jun 2010 02:38 PM

Big banks are objecting strongly to a last-minute House proposal to add ailing mortgage giants Fannie Mae and Freddie Mac to the type of firms that would be subject to liquidation at financial industry expense.

House negotiators added the provision to a massive overhaul of financial regulations at the insistence of Republican lawmakers. Senate negotiators oppose it.

The bill would require the government to dissolve large failing firms. Costs that exceed money recouped from liquidating a firm's assets would be recovered from large bank holding companies and hedge funds.

The government took over Fannie and Freddie in 2008 after they suffered heavy loan losses in the housing crash. Their collapse has cost $145 billion. Banks fear getting stuck with that cost.

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