US Treasury Secretary Henry Paulson, seeking to calm nervous investors about the financial state of Fannie Mae and Freddie Mac, said yesterday the government's primary policy focus is to leave the mortgage giants intact.

JEANNINE AVERSA
WASHINGTON

US Treasury Secretary Henry Paulson, seeking to calm nervous investors about the financial state of Fannie Mae and Freddie Mac, said yesterday the government's primary policy focus is to leave the mortgage giants intact.

"Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," Paulson said.

The financial health of the two Congressionally created companies is of critical concern to Washington policymakers because of the crucial role they play in the housing market.

The pair hold, or guarantee, around $5 trillion worth of mortgages. That is roughly half of the $9.5 trillion debt of the United States. The fear is that a failure of one or both would wreak havoc on the nation's financial system and the broader economy as well.

Paulson's comments came amid reports that the government was considering a plan to take over one or both of the companies and place them in a conservatorship.

President George W Bush met with his senior economic advisers yesterday at the Energy Department. Earlier, Paulson briefed Bush on Fannie Mae and Freddie Mac. Bush said the mortgage giants are "very important institutions."

Bush said Paulson assured him that he and Federal Reserve chairman Ben Bernanke "will be working this issue very hard".

The Treasury chief said his department is "maintaining a dialogue with regulators and with the companies."- AP