Financial reform legislation being debated by the Senate needs to overhaul government involvement in U.S. mortgage finance giants Fannie Mae and Freddie Mac, Senator Richard Shelby, the lead Republican on the Senate Banking Committee, said on Saturday.

From Reuters

As the Senate moves toward a final vote on the bill in the coming weeks, Shelby said it must include reforms for Fannie and Freddie to address the root cause of the recent financial crisis.

“For decades, these multi-trillion dollar institutions leveraged the implicit backing of the American taxpayer to encourage mortgage lending to people who could not afford to repay the loans,” Shelby said in the weekly Republican address.

“But when home prices finally collapsed, these ticking time bombs exploded, saddling taxpayers with hundreds of billions of dollars of debt,” he said.

Shelby, who has led negotiations on financial reform for Republicans, introduced an amendment to the bill last week with Senators John McCain and Judd Gregg.

FULL STORY

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