White House says changes to Fannie Freddie on deck

A couple listens as a representative from Freddie Mac talks to them about a loan modification for their home at the National Urban League's Economic Empowerment Tour in Dallas, Texas June 13, 2009.

WASHINGTON (Reuters) - Republicans should not use problems at mortgage finance giants Fannie Mae and Freddie Mac as an excuse to vote against sweeping changes to the rules of Wall Street, White House spokesman Robert Gibbs said on Sunday.

"We are going to reform Fannie Mae and Freddie Mac," Gibbs said on NBC's Meet the Press.

The Senate is expected to vote this week on a massive overhaul of the rules of Wall Street, though majority Democrats will have little margin for error to secure the necessary 60 votes to overcome a procedural hurdle and send the bill to U.S. President Barack Obama for his signature.

The House of Representatives has already approved a final version of the bill, which imposes a range of tough new restrictions on the industry in an effort to avoid a repeat of the 2007-2009 financial crisis.

Many Republicans have criticized the legislation for essentially ignoring any changes to Fannie Mae and Freddie Mac.

"But that is not an excuse to leave in place the rules that brought us this financial calamity," Gibbs said.

Gibbs said Treasury Secretary Timothy Geithner "and our economic team are working on that. That will be the next step in financial reform once we get the legislation through Congress."

Combined, the two entities that buy up mortgages, freeing home lenders to lend again, have thus far taken more than $145 billion from taxpayers since then-Treasury Secretary Henry Paulson seized them in 2008 as the housing market collapsed and losses ballooned.

Paulson's "conservatorship" was meant to be a temporary solution while policymakers figured out what to do with the two entities which own more than half of the total $11 trillion of outstanding U.S. residential mortgages.

(Reporting by Corbett B. Daly; Editing by Tim Dobbyn)