Key US Senators agree on Fannie Mae/Freddie Mac plan

The New York Times is reporting that the ranking members of the Senate Banking Committee, Tim Johnson, a Democrat from South Dakota, and Mike Crapo a Republican of Idaho,have agreed to a plan that will eliminate Fannie Mae and Freddie Mac.  The proposal would set up a new agency called the Federal Mortgage Insurance Corporation but would also ensure that most of the losses suffered from bad loans would be from private funds, not from the taxpayer.  Another part of the bill would require minimum down payments of 5% (or 3.5% for first time home buyers).  One analyst predicted that interest rates would rise approximately 0.5% as a result of these new standards.  The Times article reports there is much skepticism that a bill such as this would pass in the House of Representatives, but many are pleased at the apparent bipartisan support in the Senate.