Fannie Mae Bailout: Mortgage Giant Wants More Taxpayer Billions

Talk about bad timing. With the Senate in the thick of debate about reforming government oversight of the financial system, Fannie Mae, the quasi-public mortgage giant, reports that it lost $11.5 billion in the first three months of the year and needs another bailout --this time, $8.4 billion -- to keep going.

Some Republican senators are so fed up that they introduced an amendment Monday to the reform bill calling on the Obama administration to cut loose Fannie and its cousin, Freddie Mac, within two years. Co-sponsored by Sen. John McCain (R-Ariz.), the proposal would force the companies to cut back their mortgage business and begin paying state and local taxes, the Washington Post said.

It's not likely to pass without any Democratic sponsors on board, but Fannie and Freddie are a significant distraction as the Senate seeks consensus on sweeping legislation tightening the reins on Wall Street practices, including the ways the housing market is manipulated in the buying and selling of mortgages.

Troubled Fannie Mae, which buys and insures mortgages from other lenders, is facing an increasing number of foreclosures on its books, according to the Post. Together with Freddie Mac, the government will spend $145 billion propping up the two companies under its financial rescue program.

But Senate Banking Committee Chairman Chris Dodd said "there's no reform" in the McCain amendment. "It just gets rid of something without replacing it with anything."