Ranking Republican on Senate Panel Wants GSEs Privatized

Richard Shelby, the ranking Republican on the Senate Banking Committee, believes Fannie Mae and Freddie Mac eventually should be spun off by the government and privatized. However, he warned that doing so will take a lot time and money. The "GSEs are in our lap," the Alabama lawmaker told American Banker. "You know, we own them. I would like to see them cleared up and spun off, whatever, see if anybody wants them. It's going to take a lot of money. There's a lot of guarantee out there. It's not implicit; it's explicit." When asked if he was saying he wants to privatize the GSEs, Shelby confirmed he does. "That's what I'd like to see done with them, because if you create a hybrid deal like this it's never worked." The Obama administration is expected to unveil its proposal for the GSEs in its 2011 budget, which is due Monday. Today, Fannie and Freddie in their role as secondary market investors, account for almost 70% of all residential originations.