(03-20) 04:00 PDT Washington --

By making it easier for Fannie Mae and Freddie Mac to raise funds and back nearly $2 trillion in home loans this year, the government is making its role in steadying the economy decidedly more hands on.

That strategy is moving the Bush administration toward activist government solutions and away from its traditional free-market leanings. Behind the push: a housing crisis and credit-market calamity that have spread fear through global financial markets and made it tough for consumers and businesses to borrow.

Analysts worry that the opening for Fannie and Freddie could put too much financial risk on the backs of the mortgage-finance companies, which have taken multibillion-dollar hits from the foreclosure wave and have been hungry for capital.

Until a few months ago, administration officials voiced similar concern. They said that allowing the companies to take on more debt could threaten the global financial system, citing the pair's recent accounting scandals.

Although an independent regulatory agency put the plan in place, it wasn't without some significant stage setting by top-level Bush officials.

It was the Office of Federal Housing Enterprise Oversight that announced the plan Wednesday to quickly inject an additional $200 billion of financing for mortgages, which will require Fannie and Freddie to raise substantial funds. But Treasury Secretary Henry Paulson was said to have played a role in bringing about the move, as he did in the rescue buyout of investment firm Bear Stearns by rival JPMorgan Chase & Co. - which was orchestrated and backed up by the independent Federal Reserve.

Under the plan, the mandatory cash cushion for Fannie and Freddie - now nearly $20 billion for the two - will be reduced by a third. The housing enterprise office, which oversees the government-sponsored companies, said the goal is to free up money to help new home buyers take out loans and existing homeowners refinance into more affordable mortgages.

Sen. Chuck Schumer, D-N.Y., who has long been critical of the administration's response to the housing crisis, saw recent moves as tardy and tepid. "They're beginning to put their toe in the water," he said Wednesday. "They're still a day late and a dollar short, but at least they're looking at it."

Housing enterprise office Director James Lockhart said the relaxed capital restraints on Fannie and Freddie will channel billions of dollars into large mortgages and refinancing of subprime loans.

Yet with the two companies having recently restricted the types of mortgages they will buy as defaults have mounted, experts foresee a limited impact at ground level of the foreclosure crisis.

"Is the man on the street going to see much difference? No," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication in Bethesda, Md. "But it is going to help restore confidence in the mortgage-security market."

Fannie and Freddie are the two biggest players in that market, together holding or guaranteeing $4.9 trillion in home-loan debt. As the mortgage crisis and ensuing credit crunch have worsened, policymakers have increasingly looked to them to step up their participation in the hobbled market for securities backed by mortgages.

Some analysts see a danger, though, that the companies will become saddled with excessive risk, endangering the global financial system if they were to totter or fail. While the Treasury Department isn't obligated to assist Fannie or Freddie in a financial emergency, there is a perceived notion on Wall Street that the government would bail them out if there is a collapse.

The capital loosening was the third step the government has taken in recent weeks to allow Fannie and Freddie to shoulder larger burdens in the mortgage market despite their multibillion-dollar fourth-quarter losses and expectations of further red ink this year.

The $168 billion economic stimulus package enacted last month included a temporary increase in the cap on mortgages that the companies can purchase or guarantee, from $417,000 to $729,750 in high-cost markets. And, as a reward for filing timely financial statements following multibillion-dollar accounting scandals, Fannie and Freddie were freed on March 1 of a combined $1.5 trillion cap on their mortgage-investment holdings.

This article appeared on page C - 1 of the San Francisco Chronicle

The boy who loved life and defied the odds against a terrible illness

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Brave Owen: Lost his fight against cancer four years ago

Two months earlier, the family learned that a tumour on Owen's brain had spread to his spine. He had already undergone nearly two years of treatment and further surgery was not an option.

Sharon and her husband Liam had to face the unthinkable. "Our beautiful little boy was dying," Sharon recalls, "and now it only remained for us to make his final time as happy and comfortable as was humanly possible.

"The day he started school was the proudest of his life. I stayed on, watching through a window as, for a few wonderful hours, my bright funny son enjoyed the experience of being just like other children.

"His little hand shot up and down as he enthusiastically answered the teacher's questions, and on the drive home he was bubbling over with excitement."

Owen went to school one more day. But his deteriorating condition meant it was impractical for him ever to return. Yet until the day he died in 2004, two years later, Owen never gave up on his dream of going back and being with his friends.

Three years on, Sharon Dempsey finally felt strong enough to relive the time she spent caring for him. That experience, and what she learned from it, has been put into her book, Extreme Parenting, which she hopes will provide some comfort and guidance to other parents.

"I finally realised there was something positive that could be retrieved from such a harrowing experience," says Sharon, 38. "When Owen was ill, we had nothing to guide us through what is probably the most distressing and complicated thing you can ever experience as a parent.

"Looking after a seriously ill child is a constant juggling act between the very natural instinct to protect and mollycoddle them, and the need still to be a parent and provide them with discipline and boundaries.

"You also have to fight for them, to ensure that they get the best possible care. As well as dealing with your own fears, you're trying to provide as normal a family life as possible for your other children."

Kate, their daughter, was five when Owen was diagnosed.

"I called the book Extreme Parenting because I felt that we were, indeed, living on the edge of our parenting skills. Anyone who has cared for, or is caring for, a chronically or terminally ill child will know exactly what I mean."

She hopes the book will help parents of children with less serious illnesses, such as asthma, too.

"We all, to a lesser or greater degree, experience the same dilemmas," she explains.

Owen was born three years after his sister. His affectionate nature and smile ensured he was loved by everyone who knew him.

The family were living in Cardiff, where Liam was a financial manager. Sharon, a writer and PR consultant, organised her career around the children and loved being a hands-on mother.

When Owen went off his food in February 2000, she thought it was another virus. He had suffered with them regularly since the age of 14 months.

Sharon recalls: "As usual, the GP found nothing wrong. But two days later, at lunchtime, Owen started tilting his head. Something made me phone a friend who was a nurse. She told me to wait until she arrived to take us to hospital."

At University Hospital in Cardiff, it became clear this was no simple virus. "Owen was dragging his feet when he walked, the walk became a shuffle, then he simply stood still," says Sharon.

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Sharon Dempsey, pictured with her daughter Sarah, who is two next month, hopes she can help other parents with ill children by sharing her son's story

"The doctors tried to get him to walk to me, but he couldn't. It was heartbreaking to see. A few hours later, one of the doctors took me to one side and said that she was worried there may be something seriously wrong with Owen's brain.

"She explained she'd requested a neurological team to carry out a CT scan. I had this feeling of dread."

After the scan, his parents were taken into a room which seemed to be crowded with doctors.

"The neurologist broke the news to us with great kindness and care. He explained that there was large mass ? a tumour ? at the back of Owen's head, wrapped around the brain.

"For him to have any chance of survival, he'd need surgery within a few days."

The doctors explained that the surgery itself was extremely high risk, and could blind or paralyse him.

"As the neurologist spoke, we broke down," says Sharon. "Liam and I were literally hanging on to each other."

That night, sitting by Owen's bed, they formulated a plan. "We decided we would make sure that he was as happy as possible, and that his needs always came first no matter how bad or sad we were feeling.

"Coming up with a strategy gives you the feeling that you are not totally helpless. Owen never had a night in hospital without either Liam or myself by his side. And whenever any unpleasant procedure was done, we shared that experience with him."

Sharon and Liam carried their son to theatre, not knowing if it was the last time they would ever hold their little boy again.

As Liam kept a vigil at the hospital, Sharon went home to Kate, who was being cared for by friends.

"I had to prepare her for the fact that she might not see her brother again. Later, as she grew up, we were able to tell her more complicated things, and she became good at accepting that we weren't able to give her as much attention as Owen."

After a nine-hour operation, the surgeon explained he'd managed to remove about 95 per cent of the tumour. It was an ependymoma tumour, which affects around 30 children in the UK each year. There is no known cause.

"Owen had only a 25 per cent chance of surviving and a 75 per cent chance that the tumour would grow back and the cancer eventually spread," says Sharon.

"We knew that these were poor odds, but the doctors were upbeat. It was all such shock. Just a few days earlier, we had been a normal family.

"As he regained consciousness, Owen was in terrible pain. We asked the intensive care nurses for pain relief, but because he was only allowed it every four hours, and there was still an hour to go, they were sticking to it."

Only when Owen struggled so much that he dislodged the needle in his artery did a doctor arrive and immediately agree Owen could have his pain relief early.

"It wasn't neglect, but a lack of empathy with this poor little boy," says his mother. "I learned a valuable lesson that night. You need to forget any embarrassment or our natural inclination to be polite.

"Sick children need someone in their corner to fight for them ? and if you have to shout to get what they need, then so be it.

"As parents, we know our child and their needs better than anyone else, and a good healthcare professional should respect that."

Three weeks later, Owen went home for a brief respite before chemotherapy began. To beat such an aggressive cancer, Owen would need 16 months of treatment, with one week in hospital followed by one week at home to recover.

"Within a day of the chemotherapy, he would be vomiting and unable to eat, complaining of sore joints. He hated being in hospital.

"He was often very sick, lost weight and suffered from painful constipation. Liam took him to have his hair shaved before it fell out, and Owen was very upset by his bald head.

"It was heartbreaking because we knew we were doing the best thing, but Owen didn't understand that.We were frightened that he would be angry and resent us."

As she talked to the other parents of children in hospital, Sharon realised that this was a familiar worry.

"We made sure that we included Owen in our conversations with the doctors," she says. "We let him see that we had a good relationship with them and that we trusted them, so he trusted them, too."

By June 2001, the treatment was finished. Owen joined a nursery and made good friends. The family went to Disneyland in Paris, and there were days on the beach and trips to the zoo.

Regular blood checks and three monthly MRI scans were the only physical reminder of the possibility that the cancer might return.

But a year later ? just before Owen was due to start school ? a scan showed the tumour had grown back. There was also a big mass on his lower spine. It was inoperable.

"Quite quickly, the effects of the tumour became apparent," says Sharon. "Owen was often tired, he felt sick and had dreadful headaches.

"At almost five, he understood more, and he would ask us what he had to do to get better. He never gave up fighting."

Computer games became hugely significant. "We bought him a PlayStation 2 that he absolutely loved," says Sharon.

"Owen couldn't run or play football, but he could fly in this virtual world. All the other kids in the street would play with him, and it was a boost that he could beat them all.

"It was heartbreaking when, as the cancer spread along his spine, the nerves to his hands were damaged and he could no longer work the controls. But still he never gave up.

"In February 2004, he was talking about learning the violin and going back to school. On the night of March 1, he spoke his last words. 'Night night,' he said as he fell asleep."

He died the next morning.

"After the funeral, we were hit by the most dreadful grief. There was no sense of relief that his suffering was over because he had never wanted to die. At times, we hardly knew how to cope."

In April 2006, Sharon had a baby daughter, Sarah, and last year finally felt ready to write down everything that she had learned through Owen's illness and death.

"Although Owen was terribly ill, he was still a little boy who loved to play and learn and who wanted above all to be normal. I hope what we learned will help other families make the right choices for their child."

• Extreme Parenting: Parenting Your Child With Chronic Illness by Sharon Dempsey is published on March 27 (Jessica Kingsley, £13.99).

• Starlight is a national charity which grants wishes to seriously and terminally ill children. Visit www.starlight.org.uk

• REACT is a small charity that offers immediate assistance to disadvantaged parents with potentially terminally ill children. Visit www.reactcharity.org

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