Senate Finance Committee Chairman Christopher Dodd on Tuesday said he asked the Bush administration to lift the portfolio caps on housing finance giants Fannie Mae and Freddie Mac, but Treasury Secretary Henry Paulson expressed reluctance to do so.

Dodd told a news conference after a meeting with Paulson and Federal Reserve Chairman Ben Bernanke that he urged the two to use all the tools at their disposal here to keep our markets working and keep credit flowing.

He said allowing Fannie and Freddie to expand their mortgage portfolios would help stabilize housing markets and could be done with a regulatory order.

This would have, I think, a positive effect of dampening down interest rate hikes within the conforming loans that Fannie and Freddie may deal with here, Dodd said.

Secretary Paulson has expressed his views on the subject matter and has indicated they're not likely to move in that direction, but I'm going to continue urging them to do so.