Fannie Mae, Freddie Mac Rescue Plan Has Presidential Candidates Divided

July 15, 2008 10:23 a.m. EST

Washington, D.C. (AHN) - Candidates were divided on Monday about the government's decision to help the nation's two biggest mortgage companies cope with the deepening housing crisis.

Sen. John McCain (R-AZ) praised the Federal Reserve for allowing Fannie Mae and Freddie Mac to borrow from the Federal Reserve Bank of New York, while Sen. Barack Obama (D-IL) said there are still many details to be disclosed about the White House rescue package but that the situation is serious enough to warrant government action.

"I think the actions taken by the Fed on Fannie and Freddie are correct," McCain said while in Phoenix, according to MSNBC. "I hope that the Congress will give them the needed authorization... I hope that these measures will restore some of the necessary confidence in our institutions and preserve the ability of Americans to obtain loans in order to buy a home... It's tough time nowadays."

"I still hope that we could act on a proposal of mine which would give American homeowners in their primary residence the ability to go down, get a 35-year FHA guaranteed loan in order to be able to make their loan payments," the Republican presidential hopeful added.

Obama emailed a statement the previous day saying, "While we don't know the full details of the recently announced Fed/Treasury package, I believe that any actions taken with respect to Fannie Mae and Freddie Mac should be guided by two basic principles. First, we must maintain a steady flow of capital to the housing market to make sure that home ownership remains attainable and affordable for American families. Second, any measures should protect taxpayers and not bailout the shareholders and management of Fannie Mae and Freddie Mac."

The Illinois senator declared on Saturday that there is "little doubt we've moved into recession," according to Fox.

Shares of Fannie Mae and Freddie Mac plummeted to their lowest levels in17 years last Friday, leading to fears that the government may need to bail out the two mortgage giants.

The White House announced on Sunday that it would ask Congress for legislation extending the Treasury Department's line of credit to Fannie Mae and Freddie Mac as well as allowing the Treasury Department to buy stock from the mortgage companies.