Bush: Financials 'sound'

WASHINGTON - President Bush said yesterday that the nation's financial system is "basically sound" and urged lawmakers to quickly enact legislation to prop up mortgage giants Fannie Mae and Freddie Mac.

Bush said that the companies play a central role in the nation's housing-finance system and that government actions to help them were not bailouts because they would remain shareholder-owned companies.

Bush said that despite the woes of Fannie Mae and Freddie Mac and the recent government takeover of California bank IndyMac, U.S. depositors should not worry because their deposits are insured by the government up to $100,000.

The administration and the Federal Reserve announced an emergency rescue plan Sunday to bolster Fannie Mae and Freddie Mac, which hold or guarantee more than $5 trillion in mortgages - almost half the nation's total.

At the same time, a housing package was heading toward final congressional passage. It would modernize the Federal Housing Administration and create a new regulator and tighter controls for Fannie Mae and Freddie Mac. It's that legislation that Bush urged Congress to pass as soon as possible.

Congress could move as early as this week on the housing legislation to send it to Bush. First, though, House and Senate leaders must strike a deal in consultation with Treasury Secretary Henry Paulson to resolve key differences so Bush, who has threatened to veto the measure, will sign it.

"I think the system is basically sound, I truly do," Bush said. "I understand there's a lot of nervousness. The economy is growing. Productivity is high. Trade's up. People are working - it's not as good as we'd like. And to the extent that we'll find weakness, we'll move."

Also yesterday, Paulson said the Bush administration had no immediate plans to extend emergency loans to Fannie Mae and Freddie Mac or to purchase the stock of the two companies.