Fannie Mae to increase limits?

This article from September 21's L.A. Times Business section is great. This could be HUGE for the local lending markets, as most Southern California loans are "jumbo" loans. Right now, the conforming loan limit is $417,000.
Regulators cautious on housing fix
They acknowledge potential benefits of letting Fannie and Freddie buy bigger loans but also urge restraint.
From Reuters
September 21, 2007
WASHINGTON -- -- The top two U.S. economic policymakers told a House panel on Thursday that allowing the biggest home finance companies to buy larger loans could ease mortgage market strains but the move should be coupled with tighter regulation of the firms.Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry M. Paulson Jr. dropped some of their resistance to expanding the role of Fannie Mae and Freddie Mac and said the companies could help restore funding for the largest home loans, which has dried up.Paulson told the House Financial Services Committee that he could support letting the two government-sponsored enterprises, or GSEs, temporarily invest in so-called jumbo loans, or those above their current $417,000 limit, as part of a broader regulatory overhaul."There is little question that allowing the GSEs to securitize jumbo mortgages would give a short-term lift, which would be helpful to a segment of the housing market," he said.Rising defaults on sub-prime mortgages that had been extended to risky U.S. borrowers have set off a global chain reaction of tightening credit, and jumbo mortgages, even to prime borrowers, have been among the casualties....The chief executives of Fannie Mae and Freddie Mac, which have the support of numerous congressional allies, also appeared before the committee and repeated their calls for more freedom to invest in jumbo loans. Rates on new jumbo mortgages have risen sharply in recent weeks as lenders have found few investors willing to take them off their hands...Fannie and Freddie's regulator, the Office of Federal Housing Enterprise Oversight, on Wednesday loosened some limits on the companies' investment holdings in the hope they could do more to provide liquidity in the sub-prime market...Frank and the companies' other supporters on Capitol Hill have suggested that lifting the cap on GSE investment holdings and raising the loan limit size could ease market strains.