Figures in Both Campaigns Have Deep Ties to Mortgage Giants

Douglas Elmendorf argued that federal loans will minimize the personal risks to Fannie and Freddie managers and shareholders, while leaving taxpayers with all the risk. Instead, the government should be taking stakes in the companies in exchange for that cash. That way, a recovery would have some benefit to the government.

The McCain campaign has been reticent about backing anything that smacks of partial nationalization. Last week, the senator from Arizona issued what amounted to full-throated support of the Bush administration's efforts to keep the companies afloat.

"Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail," he said. "They are vital to Americans' ability to own their own homes. And we will do what's necessary to make sure that they continue that function."

Obama has been slightly more skeptical, at least in tone. His initial statement put the issue of homeownership first. The senator from Illinois "has long believed we should take all necessary steps to ensure affordable homeownership for millions of American families, and that includes an essential role for Fannie Mae and Freddie Mac," spokesman Bill Burton said last week.

Then on Tuesday, Obama sounded a note of skepticism: "I think it is important, with respect to Freddie Mac and Fannie Mae, that we ensure there's continued liquidity in the housing market, but that we're not devoting huge sums of money to bailing out shareholders or CEOs. I mean, I think that there's got to be some recognition that you can't have those institutions with all upside but no downside," he said on PBS's "NewsHour With Jim Lehrer."

That is still a far cry from prescriptions coming from the campaigns' left and right flanks, from firing the firms' managers before offering any loans, to nationalizing them to breaking them up. But analysts in Washington say those next steps will have to wait.

"It's going to take a lot of effort, and it's going to require some real sustained activities," John said. "It won't be easy, but it can be done."