WASHINGTON — The government takeover of Fannie Mae and Freddie Mac has spurred reaction from policymakers, industry representatives and other observers — the vast majority of it positive. Listed below are selected excerpts from some of those that weighed in.
"Putting these companies on sound financial footing, and reforming their business practices, is critical to the health of our financial system and to making further progress with the housing correction that today is weighing heavily on our economy. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing."
— President George W. Bush
"Despite pronouncements it is not a shareholder bailout, it absolutely is a shareholder bailout. Taxpayer dollars are being used to cover losses and shareholder value is left intact. It is a big mistake."
— Armando Falcon, former director of Office of Federal Housing Enterprise Oversight
"The GSEs must remain active and aggressive in the mortgage markets, as these companies play a critical role in making affordable mortgages available to hard-working Americans. Any intervention also must minimize the cost to American taxpayers, and should not put other financial institutions at risk."
— Sen. Chris Dodd, D-Conn., Chairman, Senate Banking Committee
"I expressed to the Secretary that I will evaluate [the takeover] in three dimensions: protecting the American taxpayers; restoring stability to the financial markets; and ensuring the continued availability of affordable housing."
— Rep. Barney Frank, D-Mass., Chairman, House Financial Services Committee
"This situation is yet another stark reminder that we live in difficult economic times and we must do more to help struggling families reach the American Dream. That is why I urge President Bush, Senator McCain and other Republicans to work with Democrats in the immediate days ahead to enact an economic recovery package."
— Sen. Harry Reid, D-Nev., Senate Majority Leader
"We should all be able to agree that the time has come for our financial regulators and Congress to address the fundamental issue of the Federal government's proper relationship to the GSEs and their role in the mortgage finance system. Maintaining the failed status quo is simply no longer an option."
— Rep. Spencer Bachus, R-Ala., the lead Republican on the House Financial Services Committee
"Given the substantial role that Fannie Mae and Freddie Mac play in our housing system, I believe that some form of intervention is necessary to prevent a larger and deeper crisis throughout our entire economy. I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis."
— Sen. Barack Obama, D-Ill., Democratic presidential nominee
"I strongly endorse both the decision by FHFA Director Lockhart to place Fannie Mae and Freddie Mac into conservatorship and the actions taken by Treasury Secretary Paulson to ensure the financial soundness of those two companies. These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets. I also welcome the introduction of the Treasury's new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty."
— Ben Bernanke, Chairman, Federal Reserve Board
"Secretary Paulson has threaded the needle just right by taking necessary action to stabilize U.S. financial markets while minimizing the liability for taxpayers. This plan will be met with broad acceptance in Congress because it doesn't prejudge the ultimate fate of Fannie Mae and Freddie Mac. Rather, Secretary Paulson has addressed safety and soundness concerns while deferring the larger discussion about the permanent size, scope and mission of the companies to the next administration."
— Sen. Chuck Schumer, D-N.Y., member of the Senate Banking Committee
"Fannie Mae and Freddie Mac are extremely important institutions in our nation's housing finance system. In order to promote economic growth and better stabilize the economy, we must protect them so that we can protect homeowners, homebuyers, taxpayers, and other regulated financial institutions. Placing the companies into conservatorship and providing them with backstop liquidity may allow us to accomplish these objectives."
— Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services subcommittee with oversight of GSEs
"I introduced legislation to reign in these mortgage giants over five years ago, but was fought every step of the way by their executives, lobbyists, and liberals like Chuck Schumer who stood in the way of a tough bill. Fannie and Freddie were allowed to grow too quickly and for too long without the strong oversight required of such government chartered firms."
— Sen. John Sununnu, R-N.H., former member of the Senate Banking Committee
"The decisive action taken by the Treasury was tough, but was necessary to bring confidence and certainty to the housing markets. These are extraordinary times that call for extraordinary solutions."
— Ed Yingling, president and chief executive, American Bankers Association
"I applaud Secretary Paulson and Chairman Lockhart for taking crucial steps to ensure that Fannie Mae and Freddie Mac can continue to play their critical role of providing liquidity to the housing finance system, thus providing Americans the opportunity for homeownership and affordable rental housing. The unprecedented steps announced today will provide confidence that the housing finance system will continue to operate without major disruption, and offer an opportunity for a recovery of the housing market while allowing for a full and frank debate over the future of the GSEs."
— John Courson, chief operating officer, Mortgage Bankers Association
"We are pleased that the U.S. Treasury is creating this backstop facility to ensure stability and market access. In making this facility available, Treasury is providing consistent support for all housing GSEs, and recognizing the critical role performed by the Federal Home Loan Banks in providing liquidity to the U.S. banking system."
— John Fisk, chief executive, FHLBanks Office of Finance
"It is imperative that Fannie Mae and Freddie Mac have access to the capital they need to sustain the U.S. mortgage market at this time of uncertainty in the financial markets. We applaud Treasury Secretary Paulson, Federal Reserve Chairman Bernanke and Federal Housing Finance Agency Director Lockhart for their leadership role in working to ensure that our housing market remains strong and viable."
— Fred Becker, president, National Association of Federal Credit Unions
"From the standpoint of a long-time finance and capital markets professional who is now a retired private citizen, the program announced today is bold, well crafted and could just do the trick in preventing a meltdown in the economy that was looking increasingly possible. I and many other market professionals had long since come to the conclusion that disaster could be averted only through vigorous government action and that such action needed to go beyond simply shoring up the GSEs. With the MBS purchase program you have achieved that. With the Senior Preferred Stock purchase program you have taken uncertainty totally out of the debt markets. Conforming mortgage rates and spreads should now return to normal levels based upon pre-payment risk and not upon uncertainties about credit risk or liquidity."
— Bill Longbrake, retired vice chairman of Washington Mutual Inc., now a director of First Financial Northwest
"The Financial Services Roundtable and its Housing Policy Council support the action taken today by the Treasury Department and the Federal Housing Finance Agency (FHFA) to stabilize Fannie Mae and Freddie Mac. This strong and comprehensive action is necessary to enable the GSEs to provide liquidity to the housing market which is an essential component of the effort to stabilize and strengthen the economy.The decision by FHFA and the Treasury Department to place the GSEs in conservatorship and to provide broad support for them as needed is a necessary step to enable the GSEs to provide liquidity to the housing market. We have some concerns about the potential impact on preferred stockholders, but the overall action should strengthen the mortgage and housing markets."
— Financial Services Roundtable and Housing Policy Council