Paulson said it would be up to the next Congress and president to decide "what role government in general, and these entities in particular, should play in the housing market.
Democratic presidential nominee Barack Obama issued a statement agreeing that some form of intervention was necessary, and promised, "I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis."
Republican presidential nominee John McCain also voiced support while his running mate, Alaska Gov. Sarah Palin, said that Fannie and Freddie "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."
For years, critics of Fannie Mae and Freddie Mac have said that, although the companies' shareholders reaped the benefits of their home-loan investments in good times, it would inevitably fall to the government to cover their losses in a crisis. That warning now has come true.
The Associated Press contributed to this article.
WHAT'S HAPPENING
THE TAKEOVER: The government is taking control of mortgage finance companies Fannie Mae and Freddie Mac, injecting money into them and installing new chief executives.
The government may buy up to $100 billion of preferred stock in each company, making the investments when needed. It also plans to make an initial purchase of $5 billion in mortgage-backed securities and will receive warrants representing ownership stakes of nearly 80 percent of each company.
THE REASON: Treasury Secretary Henry M. Paulson Jr. says the action is needed to stabilize the housing market and prevent the financial system from being thrown into chaos if either company collapses. That's critical because Fannie and Freddie own or guarantee about $5 trillion in mortgage loans.
THE COST: It will largely depend on how far home prices fall and how many more borrowers wind up defaulting. The Congressional Budget Office estimated earlier this year that such an intervention could cost about $25 billion but conceded that its projections were hazy.
Associated Press
