Fannie Mae said Thursday it will pay the Treasury $59 billion by the end of this quarter, bringing its total tally of dividend payments to $95 billion.
(Read More: Fannie Mae: From Bailout Child to Government Cash Cow)
But Frank, a Massachusetts Democrat, no longer sees the need for these government-sponsored agencies.
"I had once been a strong supporter," Frank said. "But they should not have been this hybrid shareholder public sector operation."
"Clearly they should now be abolished," Frank told CNBC's "Power Lunch."
Once they're gone, Frank said, something will need to replace them. "They will be replaced by a mechanism whereby lenders who want to make 30-year fixed rate mortgages will be able to buy a form of federal insurance that will guard them against interest rates spikes," he said.
(Read More: April Jobs Aside, US Is Falling Behind)
Turning to the economy, Frank blamed the recent softness on the rise in the payroll tax and ongoing spending cuts.
"It is the wrong time now to be doing deficit reduction," Frank said. "I want to see deficit reduction. I want it to start a year from now. I want to be primarily in America's wildly over-extended overseas involvement."
—By CNBC's Justin Menza. Follow him on Twitter