The leader of the Senate Banking Committee said he'd rather leave Fannie Mae and Freddie Mac in U.S. conservatorship than pass a bill that includes explicit government support for the housing market.
The comments Wednesday from Richard Shelby, an Alabama Republican, were the clearest indication yet that Congress probably will leave the mortgage-finance companies under federal control for at least the next two years as lawmakers struggle to agree on the structure of a new housing-finance system.
Shelby, speaking at a U.S. Chamber of Commerce conference in Washington, said he opposes replacing Fannie Mae and Freddie Mac with a system that includes a government guarantee for mortgages.
"My God, we might as well leave them where they are if we're going to do that," he said.
Shelby opposed a bipartisan Senate bill proposed last year that would have replaced Fannie Mae and Freddie Mac with government insurers taking losses behind private investors. That measure never got a vote of the full Senate, and now it's up to Shelby to come up with an alternative, if any.
Shelby said he has priorities ahead of dealing with Fannie Mae and Freddie Mac, the largest piece of unfinished business remaining from the government response to the financial crisis. Fannie Mae and Freddie Mac, which were bailed out by taxpayers, have since returned to profitability and currently back almost than half of outstanding home loans. The companies buy mortgages from banks and package them into guaranteed securities.
"I don't know if we would do anything in the area of" Fannie Mae and Freddie Mac,'' Shelby said. "We'll see what's doable. I don't want to do something to make it worse than it is."