Senator Mike Crapo (R., Idaho), top Republican on the Senate Banking Committee, spoke with Bloomberg TV's Peter Cook today ahead of today's confirmation hearings.

"Right now, the Democrats have the whole system greased where it will be very hard for Republicans to slow it down," Crapo told Bloomberg TV.

He also commented on the housing revamp bill, saying "I think there's a good chance that it will make it through [this year]....This is probably the biggest thing, if not one of the biggest things, that's going to happen in this Congress."

When asked how his bipartisan bill would handle current common and preferred shareholders of Fannie and Freddie, Crapo said "the answer is going to come in court rather than in Congress."

Crapo: 'Good Chance' Housing Revamp Bill Will Pass

PETER COOK, BLOOMBERG CHIEF WASHINGTON CORRSEPONDENT: Betty, as you said, Senator Crapo busy man these days, big issues here on Capitol Hill. I want to start first if I could, and thank you for the time, the confirmation hearing this morning for Stanley Fischer. First of all, given his resume, do you expect any confirmation problems, real problems, for him here in the Senate?

SEN. MIKE CRAPO (R), IDAHO: Well, with the nuclear option that has been exercised by the Democrats, it makes it a little bit difficult when they're going to push a candidate through. But I think all of the questions, the tough questions, are still going to be asked about the quantitative easing, about cash benefit analysis, about the regulatory burdens that they have a big part in managing. And so the issues are going to be put out there.

COOK: What about quantitative easing? You've had a chance to meet with him privately. Are you convinced that Stan Fischer and Janet Yellen are basically on the same page?

CRAPO: I think so. And that's a concern to me. As you know, I raised these issues with Janet Yellen. We've got, what, a $2 to $3 trillion book now at the Fed? And they just continue to keep pumping that money into the bonds of the country. And I understand the rationale behind it, but I think we're creating ourselves a huge problem.

COOK: Did he indicate any willingness to speed up the taper?

CRAPO: You know, they always say -- all of the candidates say they're willing to evaluate it, but they also in the same sentence say this has been very positive for the economy and we've got to be very careful that we ease out carefully. I think that's just code language that they're not going to be moving very quickly.

COOK: What about the regulatory front? There's some Democrats who expressed reservations about Stan Fischer, suggesting maybe he's been too cozy with Wall Street, with the banks. Do you have any concerns on that front? Do you think he's going to get questions?

CRAPO: Well, he'll get questions. And my issue with regard to the regulatory front is sort of the reverse of some of those concerns that are raised by the Democrats. My issue is the burden that is being put on the private sector right now with excessive regulations and without doing cost-benefit analysis at an appropriate level.

COOK: What about Lael Brainard, Jay Powell? There are two other Fed nominees you're going to consider today. Jay Powell is already on the Fed. Lael Brainard nominated now to be a governor. Any problems you think going forward with those nominees?

CRAPO: Well, again, right now, the Democrats have the whole system greased where it's going to be very hard for Republicans to slow it down. And they've made an indication that they're going to move forward. But like I say, we're going to bring up all of the appropriate issues and try to get them on record and, hopefully, get a change in some of the direction the Fed is taking.

COOK: All right, let me ask you about the other big issues. You unveiled along with Chairman Johnson a bipartisan bill to wind down Fannie Mae and Freddie Mac, a big issue here in Washington and across the country. Would reshape the mortgage market. How optimistic are you that this legislation is not only going to get consideration in the Senate but in the House as well, that this gets done this year?

CRAPO: Well, you know, around here with the gridlock we have, it's always dangerous to predict success. But we have a lot of factors coming together here. We've got a strong bipartisan agreement on moving forward. There is very positive reaction in the industry and in the public with regard to what we're proposing. And I think we have a good chance. This is probably the biggest thing, if not one of the biggest things, that's going to happen in this Congress. I think there's a good chance that it will make it through.

COOK: A good chance to make it through. What's your message to Republicans over in the House who look at this plan and they still too big a role for the federal government? I know if you had written this yourself, it would have looked different. But there is still a prominent role for the government to act as a backstop.

CRAPO: I understand completely the concerns in the House, and as you indicated I'd write the bill that way myself if that were the way we were doing it. The problem is it's not that versus this bill; it's the status quo versus what we're trying to deal with here.

And right now we've got $500 billion - no, excuse me -- $5 trillion in mortgages out there where the taxpayer is the first line of loss under the current system. What we're doing is putting 10 percent capital in front on top of very strong underwriting, eliminating the toxic mortgages and moving forward. And think about that 10 percent capital, with a $5 trillion system, 10 percent capital is $500 billion being put in front. Compare that to the $180 billion bailout and you can see the amount of private sector capital that we are moving in front of the government underwriting.

COOK: Let me ask you about one aspect of this that is still somewhat of a mystery because we haven't seen the final legislative language. The big question on Wall Street -- how would your legislation treat current common shareholders and preferred shareholders? Because as you know there are a lot of hedge funds out there been making a bet that Congress can't work this out, and that at the end of the day, they're going to be in the money here. They're going to make money off of Fannie Mae and Freddie Mac, their investment. How will they get treated?

CRAPO: Well, you know, the answer is going to come in court rather than in Congress. They have filed suit right now in order to challenge the way that the current conservatorship is managing the current profitability of Fannie Mae and Freddie Mac. And we are not necessarily going to dictate the outcome of that. That will be a decision that's made in the courts.

COOK: What's your own sense about the strength of their legal case? Did the treasury, did the federal government go too far here?

CRAPO: Well, I there's a strong argument to be made that the private sector investors, if they rely on a private sector system, should be able to count on that. The response to that is that the system was clearly moving into conservatorship and the taxpayers did put $180 billion into this. And I honestly don't know how the court's going to rule on this, but I do think that the answer that we get from the court will then guide Congress as to how we move forward.

COOK: What about common shareholders? They have to be the back of the line, don't they?

CRAPO: Yes, they would be. There's the senior preferred and junior preferred and then the common shares. And, frankly, right now there's the question of the taxpayers who had come in, as I said, for $180 billion as this whole issue moved into conservatorship.

COOK: Is it going to be tough politics here if we see hedge funds making millions of dollars off their investment in Fannie Mae and Freddie Mac when taxpayers, as you said, put $188 billion upfront to save these firms?

CRAPO: Yes, I think there are -- this generate some tough politics. But I continually remind folks that that's an issue coming out of the current conservatorship and the management of Fannie and Freddie. It's not something that's in our legislation that is necessarily generated by what we're proposing in our bill.

COOK: What would you say to those people out there looking at this legislation and wondering, is my opportunity to get a mortgage, is the cost going to go up? Is that going to be one of the end results here, even if it achieves less risk in the system?

CRAPO: Well, there probably will be a little bit of additional cost in some senses, but there will be actually savings and efficiencies in other contexts. What we're putting together is at the front end of everything a strong underwriting system so there will have to be buyers with the ability to repay. There will have to be proper loan to value ratios. There will have to be strong mortgages that have the kind of -- that we avoid the toxic mortgages that have pushed us into this crisis in the first place.

And what that means is that there will be some buyers who want to be able to get a mortgage like one of those unjustified mortgages that were being pushed so aggressively just before the housing crisis.

COOK: Quick last question -- final details, final legislative language on Friday, as soon as Friday?

CRAPO: That's our hope. We never know for sure exactly whether these deadlines we set around here will be met, but we're trying to get the final legislative language out within days.

COOK: All right, Senator Mike Crapo, a very busy man here on Capitol Hill, the top Republican, Betty, on the Senate Banking Committee, and he's got that confirmation hearing for Stan Fischer and others coming up top of the hour.