Obama says intervention of U.S. housing lenders necessary

CHICAGO Sun Sep 7, 2008 1:35pm EDT

U.S. Democratic presidential nominee Senator Barack Obama (D-IL) waves to supporters during a campaign stop in New Philadelphia, Ohio, September 3, 2008. REUTERS/Matt Sullivan

U.S. Democratic presidential nominee Senator Barack Obama (D-IL) waves to supporters during a campaign stop in New Philadelphia, Ohio, September 3, 2008.

Credit: Reuters/Matt Sullivan

CHICAGO (Reuters) - Democratic presidential candidate Barack Obama said on Sunday the U.S. government's takeover of mortgage finance companies Fannie Mae and Freddie make was necessary to prevent a deeper economic crisis.

"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," Obama said in a statement.

"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."

In a massive federal bailout, the U.S. government on Sunday seized control of mortgage finance companies Fannie Mae and Freddie Mac in a bid to ward off another round of global financial market turbulence.

The two companies, publicly traded but also serving a government mission to support housing, were put in a conservatorship that allows their stock to keep trading but puts common shareholders last in any claims. Their top executives were ousted.

Obama said the plan for Fannie Mae and Freddie Mac needed to focus on strengthening the economy and helping struggling homeowners rather than focusing on "the whims of lobbyists and special interests."

He also said it must protect taxpayers, not bail out the shareholders and management of Fannie Mae and Freddie Mac.

"Once we ride out the current crisis, the plan must move toward clarifying the true public and private status of our housing policies," Obama said. "In our market system, investors must not be allowed to believe that they can invest in a "heads they win, tails they don't lose" situation."

(Reporting by Deborah Charles; Editing by Bill Trott and Jackie Frank)

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