The U.S. Senate rejected an amendment to financial reform legislation brought by Idaho Sen. Mike Crapo that would have capped bailouts to mortgage giants Fannie Mae and Freddie Mac.
The measure failed with 47 lawmakers voting in favor and 46 against, according to a news release from Crapo’s office. It needed 60 votes to pass.
The amendment would have modified the Restoring American Financial Stability Act of 2010 currently being debated by the Senate. The legislation is intended to prevent financial meltdowns like the one that unfolded in 2008 and caused the federal government to rescue collapsing firms with hundreds of billions of dollars.
It would have capped bailouts for Fannie and Freddie, which buy mortgages and pool the investments as securities, at $200 billion per entity. It also would have included those bailout payments in calculations of the national debt as long as the companies are under conservatorship or receivership.
The amendment was co-sponsored by Sens. Judd Gregg, R-New Hampshire, Richard Shelby, R-Alabama, John McCain, R-Arizona, David Vitter, R-Louisiana, Kay Bailey Hutchison, R-Texas, and Bob Corker, R-Tennessee.
“How can we say that we are addressing the problems of the housing and credit crisis if we ignore reforming two institutions that played a key role in the 2008 credit crisis-Fannie Mae and Freddie Mac?” Crapo said in the news release. “Last week the Senate voted against reforming these two institutions and tonight it voted against being honest to the taxpayer by putting Fannie Mae and Freddie Mac on the Federal budget.”
The U.S. Treasury announced in December that it would lift the $400 billion loss cap on the two companies, creating a potentially unlimited liability, according to the release.
The Congressional Budget Office has estimated that the government’s cost to bail out Fannie Mae and Freddie Mac will eventually reach $381 billion, the news release says. Their combined total books are nearly $5.5 trillion.