WASHINGTON - Republicans in the House have started to chip away at mortgage finance giants Fannie Mae and Freddie Mac , taking the first legislative steps to reduce their role in the $10.6 trillion U.S. residential mortgage market.
The House Financial Services subcommittee responsible for overseeing Fannie Mae and Freddie Mac approved eight narrowly crafted bills late Tuesday and early Wednesday targeting the two firms, including one that would sharply cut the pay of their executives.
Republicans are pushing hard to curtail the role the two government-controlled firms play as part of a broad effort to scale back the government's role in housing. Democrats are more sympathetic to a continued, but smaller, government role.
The votes, largely but not entirely along party lines, marked the first concrete steps in what is expected to be a years-long process of winding down Fannie Mae and Freddie Mac.
The largest providers of U.S. residential mortgage funds were seized in late 2008 by the Bush administration as losses mounted from mortgages gone sour in the housing market collapse and ensuing financial crisis.
Then-Treasury Secretary Henry Paulson placed the two firms into conservatorship, a status meant to be temporary as the government figured out what to do with them.
The Obama administration in February unveiled a white paper providing three long-term options for overhauling the structure of the two firms and several short-term steps that could be taken to reduce their influence more immediately.
The bills approved by the panel are mostly legislative versions of those short-term steps, including an increase in the fees charged by the two firms to guarantee mortgages against default. An increase in the fees would make it easier for private firms to compete with the two mortgage finance behemoths. (Reporting by Corbett B. Daly; Editing by Dan Grebler)
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