U.S. Senate Concerned About Mortgage Bailout; Will Hold Hearings

Washington, D.C. (AHN) - Senate Banking Committee Chairman Chris Dodd (D-CT) wants Treasury Secretary Henry Paulson to testify before Congress about the government's takeover Fannie Mae and Freddie Mac.

Dodd, who worked with Sen. Richard Shelby (R-AL), the committee's highest-ranking Republican, on a mortgage rescue package earlier this summer, met with Paulson on Monday and announced later that he would hold a hearing on bailout of the mortgage giants "early next week," according to Politico.

Congress passed a bill in July giving the Treasury Department temporary authority to extend credit and buy stock from Fannie Mae and Freddie Mac, the nation's largest mortgage companies. It creates a new regulator for the two companies, called the Federal Housing Finance Agency; and modernizes the Federal Housing Administration. It provides $300 billion to help 400,000 homeowners avoid foreclosure through more affordable, fixed-rate mortgages.

Paulson had repeatedly urged lawmakers to approve the bill, saying it was only a short-term measure that would likely not be used.

Dodd earlier expressed concern over the administration's announcement on Sunday of the takeover. "There are still many unanswered questions about the Administration's plan, and Americans deserve to know if this unprecedented proposal will help keep mortgages affordable... we need to understand the circumstances which led the Administration to change course. Just weeks ago, Secretary Paulson testified that he thought he would never use this authority - a message he reiterated until very recently," he said in a written statement over the weekend.

House Financial Services Chairman Barney Frank (D-MA) has told the Congressional Quarterly that his committee will hold a hearing on the bailout on Sept. 24.