A bill to strengthen regulation of government sponsored enterprises such as Fannie Mae and Freddie Mac has been introduced by three Republicans in the U.S. Senate.

The legislation would create an independent regulator with the power to shut down the home loan financing giants and other GSEs to protect against a taxpayer bailout if they are failing. The regulator would also have the power to approve new programs and products proposed by Fannie Mae and Freddie Mac.

Nebraska Sen. Chuck Hagel, John Sununu of New Hampshire and Elizabeth Dole of North Carolina authored the bill, which would also give the regulator greater discretion in setting capital standards to protect against insolvency.

The bill comes in the wake of accounting scandals at both Freddie Mac and Fannie Mae. Last month, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.

Fannie Mae’s financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.

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