WASHINGTON – The White House Monday blamed Congress for the federal takeover of troubled mortgage giants Fannie Mae and Freddie Mac as lawmakers seek more information on the decision to bail out the nation's largest lenders.
White House press secretary Dana Perino said the Bush administration didn't want to bail out the government-sponsored enterprises, but had no choice. She said the takeover could have been prevented if Congress had acted on the administration's recommendations for changing the system.
"It is exactly the kind of event we warned about and tried to prevent over the years," she said. "Remember that we have highlighted the systemic risk posed by Fannie Mae and Freddie Mac because of the very large role they play in housing markets and because of their business practices."
She said that the White House has asked Congress "for years" to establish a strong independent regulator to oversee the institutions.
Freddie Mac and Fannie Mae together own or guarantee about half the nation's home loans, or more than $5 trillion worth. They have been faltering in their ability to cover debts on the open market.
The Treasury Department announced Sunday that it is prepared to put up as much as $100 billion in each of the companies to keep them from going broke. In exchange, the government gets ownership stakes and $2 billion of preferred stock, paying 10 percent interest.
Bush told FOX News that he would not call the government maneuver a bailout.
"I'd call it a stabilization. These two entities, which play a very important part in our mortgage market, became weak. And Hank Paulson, the secretary of Treasury, analyzed the situation and recommended that these be put into conservatorship. And I am, one, pleased with the secretary of the Treasury's decision; and two, believe that it will stabilize the markets, which is necessary at this point in time," the president said.
Members of Congress are sure to have plenty to say about the decision to save the congressionally-mandated lenders. Connecticut Sen. Christopher Dodd, chairman of the Senate Committee on Banking, Housing, and Urban Affairs, said Monday many questions remain unanswered about the temporary takeover.
Americans deserve to know if this proposal will help keep mortgages affordable, stabilize the markets and protect taxpayer interests, he said.
In the coming days, Dodd said, he will invite the architects of this plan to come before the banking panel to provide lawmakers and the public with more information.
A spokesman for Montana Sen. Max Baucus, chairman of the Senate Finance Committee, told FOXNews.com that Baucus is in talks with Paulson and the mortgage giants "to determine what extent public debt will be affected by the proposed transaction."
Perino said the takeover will allow time for Congress and the next administration to determine the appropriate future role for the companies. She said their primary mission should be to increase the availability and affordability of home mortgages.
"Whatever eventual longtime solution is decided for Fannie Mae and Freddie Mac," Perino said, "it is crucial that there are reforms so they do no pose similar risks to our economy or the financial system again."
Perino said Bush believes the move will help the housing market recover.
"Our economy will not return to strong job growth until the housing correction is behind us," Perino said.
The Associated Press contributed to this report.
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