The Senate Banking Committee voted 13-9 Thursday to send the Johnson-Crapo mortgage reform bill to the Senate floor. The bill would wind down Fannie Mae and Freddie Mac, replacing them with another government insurer while moving more of the financial risk to the private sector.
“Today's vote marks important progress toward completing one of the biggest remaining pieces of post-recession reform of the financial system,” White House press secretary Jay Carney said in a statement.
The bill still has an uphill battle, though. Last week six key Democrats, including Sen. Elizabeth Warren of Massachusetts, withdrew their support, saying the bill needed serious revision. Meanwhile, many industry and housing advocacy groups worry that the legislation would push mortgage costs higher, potentially pricing some borrowers out of the market.
The House Financial Services Committee is also against the Johnson-Crapo bill, instead backing its own mortgage reform legislation. The PATH Act, which passed the committee in July without a single Democratic vote, would dismantle Fannie and Freddie without providing a replacement, essentially privatizing the mortgage industry entirely.
The White House is calling a vote to move forward on mortgage reform legislation “important progress” – even though the bill faces long odds of being passed this year.