Canadian bank CEOs laud U.S. Fannie, Freddie steps

By Lynne Olver

TORONTO (Reuters) - U.S. government action to take control of mortgage giants Fannie Mae (FNM.N: Quote) and Freddie Mac (FRE.N: Quote) represents an important step in the "stability process" in U.S. real estate and financial markets, Royal Bank of Canada (RY.TO: Quote) Chief Executive Officer Gord Nixon said.

Nixon said there are still issues to be resolved but commended the actions that were taken in the past couple of days.

"I think they're the right ones," Nixon told a Scotia Capital financial services conference on Tuesday.

U.S. mortgage rates fell on Monday after the government seized control of Fannie and Freddie, raising hopes the plan would provide at least temporary respite from housing and credit-market troubles.

The U.S. government committed up to $200 billion to support the two huge lenders, which together back about half of the $12 trillion in U.S. mortgages.

Bank of Montreal's (BMO.TO: Quote) president and chief executive Bill Downe, also praised the steps taken to shore up the government sponsored enterprises, while noting that difficult times are not over.

"Placing Freddie Mac and Fannie Mae under conservatorship clears away a large obstacle that was in the path of home mortgage markets returning to health," said Downe, who has been a member of the Federal Reserve Board's Federal Advisory Council since 2006.

Both bank CEOs expressed caution about making U.S. acquisitions at this time, with Downe saying there is no need to rush, and Nixon stressing that he does not want to compromise RBC's strong capital position or debt ratings.