Obama says U.S. must maintain capital flows to housing

WASHINGTON (Reuters) - U.S. government support for mortgage giants Fannie Mae and Freddie Mac should protect taxpayers and not bail out shareholders or management, Democratic presidential hopeful Barack Obama said on Sunday.

"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 bail out the shareholders and management of Fannie Mae and Freddie Mac," Obama said in a statement.

Washington offered the aid to Fannie and Freddie on Sunday 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 in Asia 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)