Dodd: Fannie and Freddie must be addressed in 'next wave' of legislation

Sen. Chris Dodd (D-Conn.) said Friday that legislation to address troubled mortgage lenders Fannie Mae and Freddie Mac will have to come after the current financial-reform effort.

Fannie and Freddie, which are known as "government-sponsored enterprises" (GSEs), have been a lightning rod for criticism of Democrats during the financial reform debate.

Dodd, who is chairman of the Banking Committee and has led the effort to craft a financial regulatory reform bill, said that there was not enough room in the legislation for rules covering Fannie and Freddie.

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"Fannie and Freddie and the whole GSE system and it's a great question and a legitimate one in desperate need of reform," he said on CNBC. "But candidly there's only so much I could only take on with this bill, and so that comes up. But not in this round. It's in the next wave here we have to deal with GSEs."

Republicans have accused Democrats of ignoring the problems with the GSEs in the legislation before the Senate, which were taken over by the government over a year and a half ago when they failed during the housing market's collapse. 

Republicans argue that Democrats pushed Fannie and Freddie to purchase home loans and offer them to individuals and families who couldn't afford to pay for them.

Treasury Secretary Tim Geithner said at a hearing last month that the Obama administration intends to draft legislation that addresses Fannie and Freddie, but that the process will take time. He added that the current arrangement is unacceptable.

Majority Leader Harry Reid (D-Nev.) has given negotiators a deadline of Monday to reach a deal on the legislation, and has scheduled a procedural vote to move the bill to the floor.

Dodd said that lawmakers' problems with the legislation as is stands should not prevent it from being brought to the floor for debate.

"I'm urging fellow senators, Democrats and Republicans, many of whom have difficulties with this bill for one reason or another, let us get to the debate on Monday," Dodd said. "The American people expect this."