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Senators Agree On Plan To Replace Fannie Mae, Freddie Mac

A plan to phase out the government-controlled mortgage giants Fannie Mae and Freddie Mac and instead use mainly private insurers to backstop home loans has advanced in Congress.

The plan by Democratic Sen. Tim Johnson of South Dakota, chairman of the Banking Committee, and Sen. Mike Crapo of Idaho, the committee’s senior Republican, would create a new government insurance fund.

Essentially, investors would pay fees in exchange for insurance on mortgage securities they buy and the government would become a last-resort loan guarantor.

NPR’s Chris Arnold joins Here & Now’s Jeremy Hobson to explain the plan and discuss how this legislation might play out.

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