FACTBOX: McCain, Obama react to Fannie and Freddie woes

(Reuters) - Presidential candidates John McCain and Barack Obama reacted cautiously on Saturday to reports that mortgage finance companies Fannie Mae and Freddie Mac were set to be placed under federal control.

The Treasury Department plan would place the two government-sponsored enterprises into federal conservatorship. Fannie Mae and Freddie Mac own or guarantee almost half of the country's $12 trillion in outstanding home mortgage debt.

McCain, the Republican presidential nominee and an Arizona senator, would support a short-term solution that would keep any trouble at the companies from spreading further to financial markets, an adviser said. In the long-term, he supports privatization of the groups.

Obama, the Democratic nominee and an Illinois senator, said he would judge any bailout plan on a handful of criteria including whether it would strengthen the U.S. economy, protect taxpayers, and clarify "the true public and private status of our housing policies."

Below are the candidates' detailed responses:

REPUBLICAN NOMINEE JOHN MCCAIN

When asked about putting the two enterprises into government receivership, McCain told the CBS television program "Face the Nation" it was a necessary step.

"I think it has to be done," McCain said. "I think that we've got to keep people in their homes. There's got to be restructuring, there's got to be reorganization, and there's got to be some confidence that we've stopped this downward spiral.

"It's hard, it's tough, but it's also the classic example of why we need change in Washington. It's an example of cronyism, special interest, lobbyists, a quasi-governmental organization where the executives were making hundreds of, some billion dollars a year while things were going downhill, going to hell in a hand-basket."

McCain said he spoke with Treasury Secretary Henry Paulson.

"I did have a long conversation with Secretary Paulson, a man I admire and respect, and he did say, that when the housing market starts back up, and it will ... then the taxpayers are going to be the first to be paid off."

McCain's vice presidential running mate, Alaska Gov. Sarah Palin, addressed the issue at a rally in Colorado Springs.

"The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help," she said.

Economic adviser Douglas Holtz-Eakin said: "Over the long haul, (McCain) believes we should downsize and privatize them so that they're not a risk to the American taxpayer."

DEMOCRATIC NOMINEE BARACK OBAMA

Obama released a statement saying he was watching the situation carefully and identifying his criteria for a bailout:  Continued...