The American Bankers Association sent a letter to government officials expressing its belief that the government should "dramatically reduce" its role in housing finance, specifically Fannie Mae and Freddie Mac. In the near term, the ABA also supports lowering the maximum loan limits for the GSEs and creating a "bad bank" structure for sorting out their troubled assets. The trade group is the latest in a chorus of voices urging the government to step away from the market and allow the private sector to return to a more dominant role. Recent reports on the Treasury Department's official recommendation to Congress regarding Fannie and Freddie show that officials could be leaning this way. Moody's Chief Economist Mark Zandi recently submitted his proposal to completely disassemble the two mortgage giants. "Because of the trauma suffered by the financial markets and the borrowers they served during the recent financial crisis, it will be necessary to move toward a substantially private market in a cautious and well-considered fashion," said ABA CEO Frank Keating in the letter. Like Zandi, the ABA supports creating one or more successors to the government-sponsored entities and also proposed raising the fees these companies would charge for guaranteeing interest and principal payments to investors. This, both Keating and Zandi argue, will price them out of any dominant market share and allow the private market to flourish. These fees would also be used to repay the Treasury and taxpayers for the ongoing support of Fannie and Freddie balance sheets. The ABA said in the letter that less than of the mortgage market in the future should be guaranteed in some way by the government. It suggested that 10% be guaranteed by the Federal Housing Administration, and 30% from the GSE successors that are privately owned but backstopped by the government. The Treasury's white paper is due out this week. Attendees as the American Securitization Forum expect it to arrive Friday. But the ABA said actual reform taken afterward should take "a number of years." Write to Jon Prior. Follow him on Twitter: @JonAPrior