Effort to Rein In Fannie and Freddie Fails in the Senate

With 148 billion reasons to reform the government-sponsored entities, the Senate balked. Rather set tangible changes in motion for Fannie and Freddie, the Senate decided to order others to look at the problem today. In continuing amendment votes for the financial regulation bill, one measure sponsored by Sen. Christopher Dodd (D-CT) passed. It would require a study of the GSEs to be done by the Treasury Secretary. The far more aggressive approach, that sought to put a timetable on winding down Fannie and Freddie, offered by Sen. John McCain (R-AZ), failed.

The Dodd amendment passed by a vote of 63 to 36. It will "require the Secretary of the Treasury to conduct a study on ending the conservatorship of Fannie Mae and Freddie Mac, and reforming the housing finance system," according to the Senate's website. This shows just how frightened most politicians in Washington are to reform the GSEs. Rather than act, the Senate would prefer to pass the buck, with no commitment to actually take action. Of those voting against the measure, one was a Democrat, and the rest were Republicans. 

Meanwhile, the amendment that would have required real GSE reform failed by a vote of 43 to 56. It was offered by McCain, along with Senators Richard Shelby (R-AL) and Judd Gregg (R-NH). It sought to wind down Fannie and Freddie approximately 13 years after their conservatorship ends, to limit their bailout to $200 billion, and to require additional oversight. Two Democrats voted in favor, while the rest were were Republicans.

The McCain amendment's fate was foreshadowed by that of the Ensign amendment that failed last week, which also sought to rein in the GSEs by limiting thier size. Instead, like with provisions to audit the Fed, the easy approach was taken. Dodd's amendment really does nothing, as the Treasury is already studying the agencies and intends to unveil a plan sometime in 2011. Yet his completely uncontroversial measure passed, while the one that would have brought tangible, lasting change failed.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In