Fannie Mae, Freddie Mac shakeup seen

WASHINGTON, July 17 (UPI) -- Fannie Mae and Freddie Mac's political dealings of the past aren't good predictors of what will happen to the troubled lenders in the future, observers said.

The government-sponsored mortgage enterprises, which saw their stocks tumble as they struggle to raise billions of dollars in fresh capital, in the past successfully lobbied against more stringent regulation. Both entities have deep ties to campaigns of major party candidates, Sens. John McCain, R-Ariz. and Barack Obama, D-Ill., The Washington Post reported Thursday.

Both McCain and Obama have Fannie Mae and Freddie Mac advocates as advisers or on their campaign staffs, the newspaper said. After issuing statements commenting in general terms about the mortgage crisis and mentioning Fannie Mae and Freddie Mac second, both political camps have been quiet.

"You see a consensus developing that the current system is unsustainable," said David C. John, senior research fellow at the conservative Heritage Foundation. "But actually saying what has to happen next is a little bit scary if you're in a campaign, especially if some of your most prominent supporters have such deep ties to these entities."

Douglas W. Elmendorf, an economist at the Brookings Institution, said he hopes the mortgage crisis "shakes up" the status quo.

"(If) the taxpayers end up putting in a significant amount of money, which I think they will, members of

Congress will realize whatever their past views were, the future cannot be a replay of the past," Elmendorf said.