Fed's Bernanke endorses GSE's move into conservatorship

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Sunday he strongly endorses the decision to place mortgage finance companies Fannie Mae and Freddie Mac into conservatorship.

"These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets," Bernanke said in a statement.

Federal Housing Finance Agency Director James Lockhart placed Fannie Mae and Freddie Mac into conservatorship to ensure the financial soundness of the two companies.

Federal Bank regulators including the Fed, Federal Deposit Insurance Corporation, Office of the Controller of the Currency and the Office of Thrift Supervision said a limited number of smaller banks have holding that are significant compared to their capital.

In a joint statement the regulatory agencies said "they are prepared to work with these institutions to develop capital-restoration plans pursuant to the capital regulations."

(Reporting by Nancy Waitz)