As the role of GSEs is thrust into the spotlight by current liquidity challenges in the secondary mortgage markets, Fannie Mae CEO Daniel Mudd is actively seeking to have the company’s portfolio limits expanded. The Washington Business Journal reports:

Daniel Mudd, president and CEO of [the] D.C.-based mortgage-finance giant, said that “a moderate increase in the range of 10 percent is appropriate given both current market conditions and the importance of prudent market practice.” Mudd said that Fannie Mae is asking its regulator, the Office of Federal Housing Enterprise Oversight, for the flexibility to further grow its portfolio as part of an effort to help address “deteriorating conditions in the secondary mortgage market.”

President Bush said yesterday he would not support boosting the role of the GSEs until they have “focused” on their core mission — although part of me wonders if increasing portfolio limits doesn’t get at their core mission of providing liquidity to the mortgage market. Mudd’s push isn’t entirely altruistic, of course. American Banker ran an insightful story recently that looked at the how the current credit environment has helped the GSEs. The story underscored that the subprime credit crunch hasn’t been all that bad for the GSE business:

Patti Cook, Freddie’s executive vice president of investments and chief business officer, said Friday that the government-sponsored enterprise’s guarantee-fee business has grown 15% to 16% this year, largely because of a shift to fixed-rate mortgages.