Bush officials say GSEs could be allowed to guarantee jumbo loans

Administration might support temporary measure as part of GSE reform

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The Bush administration will consider allowing Fannie Mae and Freddie Mac to guarantee loans in excess of the $417,000 conforming loan limit to inject liquidity into the secondary market for jumbo loans, officials told Congress Thursday.

In testimony before the House Financial Services Committee, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke said that any such move would be temporary, and should be accompanied by tighter oversight of Fannie and Freddie.

Bernanke also said such action would have to be taken promptly, because financial markets will r