The US Senate added a number of amendments this week to S 3217, the Restoring American Financial Stability Act sponsored by Sen. Chris Dodd (D-CT), that aim to reform regulation of the financial markets. Many more amendments await consideration by the Senate, which plans to return to voting on Tuesday. Still pending a vote is the language sponsored by Sen. John McCain (R-AZ), the Government Sponsored Enterprise Bailout Elimination and Taxpayer Protection Amendment. According to a statement from the Senator’s office, the amendment puts in place an orderly transition period to end the conservatorship of both Fannie Mae (FNM) and Freddie Mac (FRE). It ultimately requires each to operate without government support and compete with private sector players as it winds down operations. “Fannie Mae and Freddie Mac are synonymous with mismanagement and waste and have become the face of ‘too big to fail,’” McCain said. “The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field.” The amendment would set end date for conservatorship two years following enactment, with new operations restrictions for post-conservatorship status. Following the end of conservatorship, the GSEs would have a three-year period for the orderly wind-down of operations and dissolution of the enterprises. The McCain amendment also requires the Federal Housing Finance Agency (FHFA) to establish minimum underwriting standards. It would include Fannie and Freddie in the Federal budget while still under conservatorship, limit bailouts of the GSEs and establish a Senate-confirmed special inspector general. “I realize none of us have come up with a silver bullet answer on what to do exactly with the GSEs,” said Sen Bob Corker (R-TN) from the Senate floor on Thursday. “How do we move them into the private market without totally disrupting what’s happening right now, with them being such a huge part of what’s happening? The McCain amendment would just make sure that by   a date certain we deal with it and we can do so incrementally.” Also pending consideration is the Dodd-Lincoln amendment. Sen. Blanche Lincoln (D-Ark.) previously proposed The Wall Street Transparency and Accountability Act of 2010, which would bring the over-the-counter (OTC) derivatives market under greater transparency. Commentators noted this week that derivatives reform could be added to the broader Dodd bill. Critics of the Lincoln bill are concerned sweeping OTC derivatives reform could force financial institutions to spin-off their derivatives trading operations, or abandon them altogether. Or the reform could establish a clearinghouse that aims to bring greater transparency to the market. But a clearinghouse where collateral is posted by a counterparty on the long side of a collateralized default swaps (CDS) is an attempt to commoditize agreements that have heretofore been customized transaction, according to Lawrence Longua, clinical associate professor at the NYU Schack Institute of Real Estate. “Making the clearinghouse liable for payments that the insurance provider cannot make does spread the risk, equivalent to making the clearinghouse the reinsurer of last resort, but if the risk is too large for the clearinghouse, it threatens to become a new form of systemic risk,” he told HousingWire. Write to Diana Golobay. Disclosure: the author holds no relevant investments.