Tuesday's elections handed the Republicans control of the House of Representatives — and therefore the Financial Services Committee — which means GSE reform moves to the top of their agenda.
All year Republican congressmen like Spencer Bachus of Alabama, Jeb Hensarling of Texas, and Scott Garrett of New Jersey complained that the Democrats ignored Fannie Mae and Freddie Mac in passing the Dodd-Frank Wall Street Reform Act. Now, they are in key positions to deal with the two bankrupt mortgage giants, which have been kept alive with $145 billion in federal aid.
Rep. Bachus is expected to chair the full committee with Rep. Hensarling in line to chair the Financial Institutions subcommittee. Rep. Garrett is expected to chair the Capital Markets, Insurance and GSE subcommittee.
"Addressing Fannie and Freddie will be at the head of the agenda," said lobbyist Jim Butera of the Washington law firm Butera & Andrews.
The Republicans also have pledged to roll back some of the Dodd-Frank reforms — but that may not be politically popular as a standalone bill.
"In addressing some of their concerns with Wall Street Reform, the easiest way to do that is to couple it with GSE reform," said Bill Himpler, executive vice president of the American Financial Services Association.
Whatever the House GOP attempts, they will face resistance in the Democratic controlled Senate and the White House — which means Republicans will have to tone down their proposals if they expect any measures to pass.
