WASHINGTON – A top lawmaker on Capitol Hill is calling for the elimination of mortgage finance companies Fannie Mae and Freddie Mac and the establishment of a new system to provide money for U.S. home loans.

Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said Friday he supports replacing the two companies entirely.

"I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," Frank said at a hearing on executive compensation issues. "That's the approach, rather than the piecemeal one."

His comments show how much the financial crisis has upended the relationship between lawmakers and the two companies. Frank was long one of the staunchest supporters of Washington-based Fannie Mae and Freddie Mac, based in McLean, Va.

The two companies, which have been run by the government since they almost collapsed in September 2008, have required $111 billion in federal aid to stay afloat. Late last year the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion.

Regulators announced last month the CEOs of Fannie and Freddie could get paid as much as $6 million for 2009. That has outraged Republican lawmakers on Capitol Hill.

"We are paying these people bonuses to lose tens of billions of dollars," said Rep. Jeb Hensarling, R-Texas at Friday's hearing. "What people do with their money is their business. What they do with the taxpayer money is our business."

Fannie Mae and Freddie Mac provide vital cash to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages in the U.S.

So far, the Obama administration has been quiet about its plans for the two companies. In an interview Thursday on PBS, Treasury Secretary Timothy Geithner said the Obama administration will "propose a set of detailed reforms beginning this year" for Fannie and Freddie. But he said legislation will have to wait until next year "because it's just a complicated thing to get right."

Shares of both companies sank on the news. Fannie Mae closed at 99 cents, down 7.5 percent. Shares of Freddie Mac closed at $1.17, down 10.7 percent, but added a penny in after-hours trading.