Fannie Mae and Freddie Mac have staved off an effort by lawmakers to impose a multibillion-dollar tax on debt sales by the agencies to fund a massive transportation bill, sources said Wednesday.
Lawmakers began mulling a plan late last week to raise $4.5 billion to $6 billion over five years by charging Fannie and Freddie a 20-basis-point fee on long- and short-term debt issued to investors. An alternative imposing a lower fee would have raised $1 billion over the same period.
In addition, Congress considered raising:
$1.3 billion by hiking annual premiums on FHA mortgage loans with high- loan-to-value ratios and ending FHA rebates of up-front premiums paid by borrowers.
$150 million by increasing the guarantee fee Ginnie Mae charges issuers of its securities.
Lobbyists for Fannie Mae and Freddie Mac worked quickly over the weekend to squelch the plan, arguing that the fees would have wrecked the international market for their debt securities and resulted in higher mortgage rates.
A Fannie Mae spokesman said the agency has been assured this package of proposals has been rejected and is likely dead for the year.
"It is widely understood now to be a tax on homeownership, and that is not something most members of Congress would want to champion in an election year," he said. "We have been told this is not in play."
A Freddie Mac spokesman stopped short of declaring victory, but said Republicans and Democrats have killed similar proposals in the past. "It has been opposed by a majority on a bipartisan basis before," the spokesman said. "We think there will be the same kind of support against it now."
Capitol Hill sources agreed that these proposals are unlikely to be adopted but cautioned that a final decision had not been made.
House and Senate leaders are trying to resolve differing versions of a $200 billion bill that would fund highway, bridge, and mass transit projects nationwide. They lack nearly $20 billion in funding but appear to have identified cuts in benefits to pay for it.
Congressional leaders plan to schedule a vote on the transportation bill Friday, but political squabbles could delay voting until after the Memorial Day recess next week.
How long Fannie Mae and Freddie Mac, which are government-sponsored companies that buy mortgage loans and package them for investors, can hold off revenue-hungry lawmakers is unclear. Observers noted that the proposed fees might be brought up again during separate negotiations over the federal budget.
"The real issue is, it is cued up," a bank lobbyist said. "It is money that is out there that is vulnerable."
Fannie Mae and Freddie Mac are battling an image as subsidized fat cats. Critics say the agencies can borrow at lower costs than competitors and have lenient capital requirements.
House Banking Committee Chairman Jim Leach said last week that Treasury Department officials could be put on the companies' boards to help ensure their investments are related to their housing mission. (See story on page 10.)