Political News: Obama, McCain call for changes in mortgage giants

From The Associated Press

Democratic presidential nominee Barack Obama said Saturday that any government takeover of troubled mortgage giants Fannie Mae and Freddie Mac must put the interests of taxpayers and homeowners first. His opponent, Republican nominee John McCain, said it was essential to restructure the mortgage giants.

The historic takeover of Fannie Mae and Freddie Mac could come as soon as Sunday. Fannie Mae and Freddie Mac together hold or back half of the nation’s mortgage debt, and have played an increasingly important role in the real estate market since the credit crisis started in August 2007. A government bailout could cost taxpayers around $25 billion, according to the Congressional Budget Office.

Treasury Secretary Henry Paulson and two other regulators are working on a plan to put the troubled mortgage finance companies into a conservatorship, and remove Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee.

“Any action we take must be focused not on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners,” Obama told reporters after a campaign stop in Indiana. He stopped short of making detailed proposals, saying “we need to carefully address” the possible impact on community and regional banks. “But we must not allow government intervention to protect investors and speculators who relied on the government to reap massive profits,” he said.

In Colorado, McCain said, “today we’re looking at a federal bailout of our home loan agencies.” McCain said in an interview for CBS “Face The Nation” to be aired Sunday that the mortgage giants need to be restructured.

“I think that we’ve got to keep people in their homes,” McCain said. “There’s got to be restructuring, there’s got to be reorganization, and there’s got to be some confidence that we’ve stopped this downward spiral. It’s hard, it’s tough, but it’s also the classic example of why we need change in Washington. It’s an example of cronyism, special interest, lobbyists, a quasi-governmental organization where the executives were making hundreds of — some billion dollars a year while things were going downhill, going to hell in a hand-basket. This is the kind of cronyism, corruption, that’s made people so justifiably angry.”

Obama and McCain said Treasury Secretary Henry Paulson briefed them on the mortgage crisis and the administration’s steps toward a government takeover of the two financial companies.