McCain advisor: Fannie, Freddie moves support market

PHOENIX (Reuters) - Republican presidential candidate John McCain believes the federal government's offer of massive aid to Fannie Mae and Freddie Mac is consistent with the goal of providing support through 'current duress,' a top aide to the senator said on Sunday.

"John McCain believes that financial duress at the housing GSEs cannot be permitted to translate into a threat to the stability of financial markets or pressure on housing markets," Douglas Holtz-Eakin, a senior policy advisor to the Arizona senator, said in a statement.

"The moves announced today are consistent with the goal of providing support for a path through the current duress, toward steps that include regulatory reform, market discipline and mission focus," Holtz-Eakin said.

Washington offered the aid to Fannie and Freddie to bolster confidence in the mortgage finance giants and head off a potential meltdown in financial markets.

Unveiling the latest emergency measures to calm markets roiled by the country's prolonged housing crisis, the Fed said Fannie and Freddie could have access to its emergency cash if necessary, effectively opening its discount window in a move echoing recent action to save investment bank Bear Stearns.

The Treasury separately said it would temporarily boost its line of credit to the two mortgage financiers, as well as purchase equity in them, a step never taken before, if needed.

Both companies, which are shareholder-owned but also government-sponsored, said they are adequately capitalized, but welcomed the measures and said they would help confidence.

The dollar jumped and stock futures rallied on the powerful message of support from the U.S. Treasury and the Federal Reserve, which also drew criticism for being a potential bailout that could cost U.S. taxpayers dearly.

(Reporting by JoAnne Allen; editing by Todd Eastham)