Bush Says Fannie, Freddie to Remain Private

Posted July 15, 2008 at 11:40am

President Bush said on Tuesday that he would work to maintain Fannie Mae and Freddie Mac as private institutions, suggesting the government will not go so far as a takeover of the nation’s federally backed mega-lenders to shore up their troubled finances.

Bush, who spoke during a White House news conference, said a widespread banking collapse was not going to happen.

“I think the system basically is sound — I truly do,” he said. He also noted that there is good news about the economy to accompany the bad.

“I understand there’s a lot of nervousness, but the economy’s growing; productivity’s high; trade’s up; people are working,” he said. The president suggested that the economy is not in a recession, noting that while growth is anemic, it was not negative in the first quarter.

With the emphasis on the positive, Bush offered no new prescriptions for the sagging economy and battered stock market. He did not rule out backing another stimulus bill, but he suggested the one passed earlier this year still needs time to work.

He said a president can’t quickly lower gasoline prices, indicating he will not tap the Strategic Petroleum Reserve or try to force consumers to conserve energy. “You just can’t say, ‘low gas,’” he said. Bush acknowledged that there was evidence of speculation in the oil markets, but he argued that the driving force for price increases is a simple case of demand outstripping supply.

Nevertheless, the president said some ideas he has emphasized for months could have short-term effects. Congress should move to open up more drilling, he said, which could create a perception that more oil is coming and help reduce prices.

Bush also repeated a familiar litany of other demands related to the economy, urging Congress to move housing and energy legislation. He professed bafflement that Speaker Nancy Pelosi (D-Calif.) has sidelined the Colombia free-trade agreement, repeating arguments that the deal would assist Colombian President Alvaro Uribe’s fight against leftist guerrillas and increase U.S. exports to the country. Many Democrats oppose the legislation because of killings of labor leaders in Colombia.

Responding to an assertion by presumptive Democratic presidential nominee Sen. Barack Obama (Ill.) that the Iraq War was not the central front in the war on terror — as Bush has repeatedly stated — the president appeared to engage in some unusual revisions to his rhetoric. “My view is that the war on terror is being fought out on two simultaneous fronts that are … noticeable to the American people, and on other fronts that aren’t,” he said.