Senate Finance Committee Chairman Christopher Dodd told CNBC on Tuesday that he asked the Bush administration to lift the portfolio caps on housing finance giants Fannie Maeand Freddie Mac, but Treasury Secretary Henry Paulson expressed reluctance to do so.
"The power (to lift portfolio caps) exists within the regulator and certainly if the President of the United States and the Secretary of the Treasury would indicate the importance of that, I think it would happen," Dodd said on CNBC's Morning Call.
"I think indicating a willingness to raise those caps would have value right now," Dodd added.
The Democratic senator from Connecticut, who met with Paulson and Federal Reserve Chairman Ben Bernanke Tuesday morning, said later during a press conference that he had urged the two to use "all the tools at their disposal here to keep our markets working" and keep credit flowing.
He said allowing Fannie and Freddie to expand their mortgage portfolios would help stabilize housing markets and could be done with a regulatory order.