And maybe I'm not understanding what McCain said correctly ( I had started to doze off at this point from the bore fest of both candidates), but doesn't Fannie Mae and Freddie Mac currently buy mortgage debts from other banks (was pretty sure they do this in addition to their other activities). So how would this be much different from what McCain proposes.

The Federal National Mortgage Association (Fannie Mae), which was created in 1938. Fannie Mae purchases so-called conforming mortgages (mortgages under a certain size) made by other lenders and packages them into securities, which it effectively insures. (Here's a historical table of the conforming loan limit, which was $417,000 for a single home last year.) Fannie Mae and its brother government-sponsored enterprise, Freddie Mac, are playing a central role in the federal response to the housing crisis. The stimulus package boosted the size of the loans Fannie and Freddie can buy, from $417,000 to "125 percent of the area median home price in high-cost areas, not to exceed $729,750." And then earlier this month, OFHEO, the body that regulates Fannie and Freddie, said it would lift the cap on the amount of capital they could use to buy mortgage-backed securities and make loans, providing "up to $200 billion of immediate liquidity to the mortgage-backed securities market.

from Roosevelt-era reforms are saving capitalismĆ¢ā?¬ā?again. - By Daniel Gross - Slate Magazine , which is actually a good quick read.

With both Fannie and Freddie being GSE's. no matter how you look at it the government has their hands all over these two companies. They might as well be part of the government.

Doesn't sound like McCain is saying anything new, more like rehashing what FDR put into place 70-80 years ago.