Democrat Barack Obama left open the possibility that the federal government won't need to take any steps to aid mortgage giants Fannie Mae and Freddie Mac, saying it needs to watch the evolving situation before making a decision. ``I think we need to watch carefully to see how it plays out before we make a decision about which steps need to be taken, if any,'' Obama, 46, said aboard his campaign plane from Chicago to San Diego late Saturday. It was the first time Obama addressed concerns over the stability of the two firms that own or guarantee almost half the $12 trillion in U.S. mortgages.
Obama, his party's presumptive presidential nominee, said he's committed to making sure there's liquidity in the housing markets and that Fannie Mae and Freddie Mac ``play critical roles in that process.'' Obama said he's been monitoring the situation ``closely'' and that it's ``of extraordinary concern.''
If the government were to step in and provide the firms with more liquidity, ``there are a lot of different definitions of what a bailout would look like,'' Obama, an Illinois senator, said without providing specifics.
``There are issues related to the short term liquidity --can they borrow money -- versus issues related to whether the underlying assets of the two corporations are really unsound,'' he said.
Mortgage Crisis
U.S. Treasury Secretary Henry Paulson on Friday signaled that a government takeover of the two firms, the biggest buyers of U.S. mortgages, won't be necessary, saying they should continue as shareholder-owned companies with federal charters.
Senator John McCain of Arizona, the presumptive Republican presidential nominee, told reporters July 11 that Fannie Mae and Freddie Mac would ``very likely require some kind of government assistance,'' and while he didn't know what the best immediate action would be, McCain said he'd ``support effective action to keep them from going under.''
Obama said the ``bigger problem'' is the broader mortgage crisis and that with ``some prudent steps by the government that we'll be able to stabilize the situation.''
He praised the $300 billion housing rescue package that the Senate passed this week and called on President George W. Bush to sign it, saying the U.S. has moved into a recession and it's necessary to move ``swiftly'' on a final housing bill. Obama also reiterated his call for an additional $50 billion stimulus package.
Still, he said, the Senate housing bill ``is not the end-all, be-all; there's going to still be some working out to do.''
Obama the new spokesman for the FED? Dont forget, Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds
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