Yesterday the Senate rejected an amendment by Senators McCain, Shelby and Gregg that would have capped the taxpayer losses on Fannie and Freddie at $200 billion each. The amendment would have also brought Fannie and Freddie onto the Federal budget, forcing the government to admit what most of us already suspect: we’re on the hook for their bad behavior. All Republicans, with the additions of Democrats Feingold and Bayh, voted for the failed amendment. As a substitute, which passed along party lines, Senator Dodd proposed that the Treasury Department would “study” the issue and report back to Congress.

While it was not surprising that Dodd lead the opposition to the McCain amendment (it is not the first time he’s protected Fannie and Freddie), what was surprising was his repeated explanation that the National Association of Realtors and National Association of Home Builders opposed the amendment. With all of Obama’s talk about taking on special interests, I was starting to think the Senate might be serious. But what’s a few $100 billion of taxpayer dollars to insure that real estate agents can get a few more fat commissions.

Even more bizarre was Dodd’s claim that his substitute amendment was a “tough study”. What exactly is so tough about requiring Treasury to do a study that they’ve already said they were going to do. For that matter, what’s so tough about a “study”? The failings of Fannie and Freddie, and their inherent conflicts, have been studied extensively for years. The rejection of the McCain amendment illustrates why we need GSE reform now, as the special interests are already claiming that another study is all we need.