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.
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