President Bush held a press conference yesterday and two of the main topics of discussion were declining housing values across the nation and Secretary Paulson's recently proposed rescue plan for Fannie Mae and Freddie Mac which, among other things, would supply a temporary increase in the line of credit the two government-sponsored enterprises can have with the Treasury.

“These two enterprises play a central role in our housing finance system, so Treasury Paulson has worked with the Federal Reserve Chairman Bernanke [to] put the companies and the government regulators on a plan to strengthen these enterprises. We must ensure that they can continue providing access to mortgage credit during this time of financial stress,” said the president when broaching the subject of Fannie and Freddie Mac.

In line with this sentiment, Bush urged Congress to quickly enact the necessary legislation to put Paulson's plan in place and strengthen the GSE regulatory reform legislation currently heading to the House. The president stressed however that Paulson's plan is intended to be a temporary measure, put into place only if absolutely necessary, and that the two companies should continue to remain private enterprises.

The president stated that he hoped that the plan would have a calming affect on the nervousness surrounding the future of the companies and said, “the truth of the matter is, by laying this out, it makes it less likely we'll need to use this kind of authority to begin with.”

When pressed further about how he felt about the government intervening into private enterprise, Bush stated that he did not see the proposed plan as a bailout. “If your question is, should the government bail out private enterprise, the answer is, no, it shouldn't. And by the way, the decision on Fannie Mae and Freddie Mac—I hear some say “bailout”—I don't think it's a bailout. The shareholders still own the company...these need to remain private enterprises, and that's what our message is,” Bush said.

Although the president acknowledged the current problems affecting the nation, such as the housing slowdown, he was quick to point out that there was still strength in the economy.

“Our citizens are rightly concerned about the difficulties in the housing markets and high gasoline prices and the failure of the Democratic Congress to address these and other pressing issues. Yet despite these challenges we face, our economy has demonstrated remarkable resilience. While the unemployment rate has risen, it remains at 5.5 percent, which is still low by historical standards. And the economy continued to grow in the first quarter of this year. The growth is slower than we would have liked, but it was growth nonetheless,” Bush said. “The bottom line is this: We're going through a tough time, but our economy has continued growing, consumers are spending, businesses are investing, exports continue increasing, and American productivity remains strong. We can have confidence in the long-term foundation of our economy, and I believe we will come through this challenge stronger than ever before.”

To read the full transcript of President Bush's press conference click here.
Rachel Daniels