Clea Benson, Bloomberg

A bipartisan group of U.S. senators is putting the final touches on a bill that would liquidate Fannie Mae and Freddie Mac (FMCC) and replace them with a government reinsurer of mortgage securities behind private capital.

The legislation, written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner with input from other senators, is likely to be the first detailed blueprint reflecting a growing consensus in Washington that the U.S. role in mortgage finance should be limited to assuming risk only in catastrophic circumstances. It also reflects the prevailing view among lawmakers that the two government-sponsored enterprises should cease to exist, according to a discussion draft obtained by Bloomberg News.

As a serious bipartisan effort written by members of the Senate Banking Committee, the measure could restart the long-stalled debate over the future of the mortgage-finance system. Still, it represents only a first step in what is likely to be a long legislative process, and it’s unclear how much support the authors will get from their colleagues.

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