Frank calls for shutdown of Fannie, Freddie

WASHINGTON - A top lawmaker on Capitol Hill is calling for the elimination of mortgage finance companies Fannie Mae and Freddie Mac and the establishment of a new system to provide money for U.S. home loans.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said Friday that he supports replacing the two companies.

"That's the approach, rather than the piecemeal one," Frank said at a hearing on executive compensation issues.

The two companies, which have been run by the government since their near collapse in September 2008, have required $111 billion in federal aid to stay afloat. Late last year the Obama administration pledged to cover unlimited losses through 2012 for both companies.

Also Friday, Frank defended the setting of executive pay rules for financial firms, saying federal aid helped the companies generate cash for compensation.

The argument that the government is interfering in a company's business by setting governance rules on pay is "nonsense," Frank said Friday at a committee hearing in Washington.- AP