WASHINGTON (AP) - Federal taxpayers should stop propping up Fannie Mae and Freddie Mac, and Congress will wean the country away from its reliance on the two huge but fiscally feeble housing finance companies, House Republicans said Wednesday.
Democrats conceded that changes are needed in Fannie and Freddie, which have swallowed $150 billion in federal aid since the government took them over in September 2008. But they cautioned that care must be taken to avoid jeopardizing the popular 30-year fixed rate mortgage and the access to the housing market that the two companies have helped provide to millions of moderate-income families.
The lawmakers made those points at a hearing Wednesday of the House Financial Services subcommittee that oversees the two housing giants.
Neither Republicans nor Democrats are ready to push specific plans or timetables for overhauling Fannie and Freddie through Congress. That underscores the divisions that exist over how to fix the way the nation's $11 trillion housing market is financed, and the hesitation many lawmakers feel about making drastic changes in such an enormous sector at a time when the economy is beginning to rebuild strength after its deep swoon of the past three years.
Many Republicans argue that Fannie and Freddie were a major cause of the nation's housing crisis of falling home prices and numerous foreclosures by financing numerous subprime loans - mortgages that quickly became worthless because they went to people who could not afford them.
Democrats say Fannie and Freddie merely followed the private sector, which set the pace for making subprime loans, and performed the constructive functions of keeping 30-year mortgages affordable and helping lower income families become homeowners.