Fannie Mae, Freddie Mac reform bill may struggle to get to Senate floor

May 9, 2014, 2:47 PM ET

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the prospect of legislation to reform Fannie Mae FNMA  and Freddie Mac FMCC  may struggle to get to the floor now that a core group of Democrats oppose the Johnson-Crapo reform bill, an analyst said Friday.

Bloomberg

Mel Watt, director of the Federal Housing Finance Agency

The Wall Street Journal, Bloomberg, and Politico reported that six Democrats on the Senate Banking Committee are going to oppose the legislation. There’s still enough support to get it out of committee on a 13-9 vote, but that’s not a big enough margin to make it to the floor, according to a research note from Keefe, Bruyette & Woods analyst Brian Gardner.

He says the likelihood the mortgage-buying giants will survive in current form has increased.

On Tuesday, Federal Housing Finance Agency Met Watt is due to give a speech on the next steps in the conservatorship.

“We expect he will reiterate many of the elements of FHFA’s Strategic Plan such as creating a common securitization platform. Between the lines of his speech, we expect he will signal that FHFA might be open to making mortgage credit more easily available,” Gardner said.

Gardner also said to watch for the trial in the Perry Capital case over the next few months, as hedge funds challenge the decision to sweep all the profits at Fannie and Freddie into the Treasury.

– Steve Goldstein