DeMarco To Be Acting Director Of Fannie, Freddie Regulator

A top official of the agency that regulates Fannie Mae (FNM) and Freddie Mac (FRE) will take the reins from the agency's current director, James B. Lockhart, when he steps down later this month.

Edward J. DeMarco, chief operating officer at the Federal Housing Finance Agency, will serve as acting director until the Obama administration decides who will head the agency. DeMarco, 49, also is the agency's senior deputy director for housing mission and goals.

Lockhart's successor is poised to play a key role in deciding the future of Fannie and Freddie, something the administration has yet to decide. The White House has said it will unveil a plan for Fannie and Freddie when it releases its 2011 budget in February.

The mortgage companies were thrown under the conservatorship of their regulator last autumn, after mounting mortgage defaults began to eat through their thin cushions of capital, raising fears they would collapse.

The government has pumped $85 billion into the firms to keep them afloat. Lockhart has said they would emerge from conservatorship once they were stabilized - a process that could take years.

Speculation is mounting in Washington about what, if any, changes the Obama administration will propose for the companies - shareholder-owned firms that have for decades served a public mission of ensuring the broad availability of mortgage credit.

Proposals include turning Fannie and Freddie into cooperatives owned by mortgage lenders, remaking them in their old hybrid mold, folding them into the government or splitting them into smaller companies. Another idea is to remake the firms as public utilities, subject to strict regulation and profit limits.

Christina Romer, a top economic adviser to President Barack Obama, on Thursday declined to discuss the administration's plans for the companies.

"Of course, something we're going to be thinking about is where do we go from here," Romer said, adding that she didn't "want to get ahead of the process," which is just beginning.

-By Jessica Holzer and Henry J. Pulizzi, Dow Jones Newswires; 202-862-9228; [e-mail]