McCain May Privatize Fannie, Freddie; Obama Sees Federal Role

Rich Miller and Matt Benjamin
Bloomberg
Tuesday, Sept 9, 2008

John McCain and Barack Obama agree the Treasury needed to step in to rescue Fannie Mae and Freddie Mac. They disagree over how much the U.S. government should be involved in the housing market once the immediate crisis is past.

Republican Senator McCain of Arizona wants the government to take over the two agencies, split them up, and then exit the mortgage-finance business by selling them off. Democratic Senator Obama of Illinois is suggesting a more lasting federal involvement.

“The role of the U.S. government in the housing industry is in play,” said Jim Leach, a former 15-term Republican congressman from Iowa who is now an Obama supporter. “There are pragmatic and philosophical issues at stake.”

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The differences between the two presidential candidates over the lenders mirror a broader philosophical divide over the part the government should play in the economy. McCain supports steep cuts in taxes and spending to promote growth. Obama, while backing some tax reductions, favors increased public investment to boost the economy and job growth.

Conservatorship

Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart placed Fannie and Freddie in a government-operated conservatorship over the weekend, ousting their chief executives and eliminating their dividends.

Full article here

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