WASHINGTON — Though policymakers across Capitol Hill rushed Sunday to praise the Treasury Department for seizing Fannie Mae and Freddie Mac, there was growing criticism in some quarters that the move did not go far enough.

Federal regulators opted to place the companies into conservatorship, effectively protecting the interests of owners — rather than putting them in receivership and wiping them out.

Some critics, including a former top regulator of Fannie and Freddie, said that was a mistake.

"The administration's policy is we don't care about moral hazard," said Armando Falcon, the former director of the Office of Federal Housing Enterprise Oversight. "They've showed it time and again. They showed it with Bear Stearns. Now they are showing it in a more reckless way by committing taxpayer dollars and not first wiping out the claims of shareholders."

Peter Wallison, a fellow at the American Enterprise Institute, agreed the Treasury had to do something to backstop the government-sponsored enterprises, but he said Secretary Henry Paulson "did the wrong thing."

"A conservator doesn't have authority to do anything but right the ship," Mr. Wallison said. "Why right the ship? If you listen to Paulson, he says this is a flawed business model. Why would you resuscitate a flawed business model?"

The battle over conservatorship or receivership was brewing long before Sunday's actions. In 2004, lawmakers sparred over whether a new GSE regulator should be given receivership powers. At the time, the GSEs opposed such a provision, arguing it would create uncertainty in the market. Conservatorship, they claimed, was better understood by Wall Street and was sufficient to handle massive problems at the GSEs.

The companies, which eventually acceded to giving receivership powers to the new regulator, may have been right all along.

Karen Shaw Petrou, the managing director of Federal Financial Analytics, said if the Federal Housing Finance Agency — the new GSE regulator created just two months ago — had put the companies into receivership, it might have sparked a market panic.

"Even though the new law is designed to prevent market panic, it could well have ensued. A conservatorship doesn't do that — you are keeping everything as is."

Paul Miller, an analyst with Friedman, Billings, Ramsey, said conservatorship also created the most flexibility. The government could later put the companies into receivership if it decides to eliminate the GSEs.

Common stockholders were punished by the move, he said. "The shareholders lost everything," he said. "The stock is effectively worthless."

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