The U. S. Senate Banking Committee has announced its plans to dismantle Fannie Mae and Freddie Mac after a long time, resulting in a 10 per cent fall in the value of the shares of the mortgage companies.

Members of the House and Senate are set to complete a plan to liquidate Fannie Mae and Freddie Mac (FMCC) and replace the failed bank with a government reinsurer of mortgage securities with private capital. The two firms, which were rescued by a $187 billion taxpayer bailout during the financial crisis, now guarantee 30-year mortgages for generations. The financial giant is accused of selling mortgages that turned soar during the housing market fall in 2008.

The new plan would require private financiers to accept first-loss position for covering steep losses, according to the draft of the plan. The senators are planning to introduce the plan within this month for the plan to be implemented soon. The bill has been written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner.

Fannie Mae shares tumbled as much as 44 percent and closed 31 percent lower at $4.03 in New York and Freddie Mac fell 27 percent to close at $4.04 after analysts said that the plan would be disadvantageous for shareholders.