WASHINGTON — Senate Republicans hope to add language to the financial regulatory overhaul bill that would require Fannie Mae and Freddie Mac to stand on their own two feet, or be wound down if they can't.

An amendment backed by Sens. John McCain, R-Ariz., Richard Shelby, R-Ala. and Judd Gregg, R-N.H., would dictate an end to the conservatorship period for both of the troubled government-sponsored enterprises two years from the legislation being enacted.

No later than six months after that point, the two entities would have to demonstrate they could operate without government subsidies on a level playing field with private-sector competitors, or be placed into liquidation if they couldn't.

Republicans hope to have a vote on the amendment as part of the Senate debate over legislation introducing sweeping changes to the oversight of Wall Street's activities.

Senate Majority Leader Harry Reid, D-Nev., said Tuesday he had no problem with allowing a vote on a Republican amendment addressing the two entities, but the level of Democratic support is unclear.

Republicans have argued that any overhaul of the financial regulatory landscape would be incomplete without addressing the future of Fannie Mae and Freddie Mac.

The Obama administration has countered that the entities are better placed to continue in their current conservatorship position until officials determine the best path forward to deal with them.

In September 2008 at the height of the financial crisis, the Treasury effectively nationalized the two firms when they were on the brink of collapse. Since then, billions of dollars of taxpayer dollars have been injected into them to stabilize their balance sheets.

The Republican amendment would cap the maximum taxpayer exposure to Fannie and Freddie at $200 billion and require them to reduce their holdings by 10% of the prior year's holdings.

After emerging from conservatorship, the entities would have to reduce their mortgage-related assets to $250 billion from their current level.

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