WASHINGTON (AP) – Treasury Secretary John Snow on Thursday urged tighter regulation of Freddie Mac, the home mortgage company under criminal investigation by federal prosecutors, and its larger sister in the mortgage market, Fannie Mae.

Snow, speaking to reporters in Mexico City, was the first member of the Bush administration to comment on Freddie Mac since the government-sponsored company shook up its top leadership Monday because of accounting problems. The move jolted the stock market and raised concern about a possible impact on the housing market.

“These are huge entities making huge markets, so we better make sure we have the appropriate level of oversight and disclosure,” Snow said, referring to Freddie Mac and Fannie Mae. “I would like to make sure that the oversight authority is commensurate with the importance of these institutions and appropriate to the circumstances they find themselves in.”

The Treasury chief said he was not endorsing any particular legislative or regulatory remedy. Congressional critics of the two companies have circulated proposals to toughen federal oversight and curtail the privileges that come from their status as congressionally chartered enterprises in the multitrillion-dollar home mortgage market.

The diaries of Freddie Mac’s president, who was fired over his role in an accounting review, are drawing interest, as is his pay. Freddie Mac’s chairman and chief executive, Leland Brendsel, left with a special package worth some $24 million. The ousted president is keeping company stock options worth $5.3 million.

“We are deeply concerned that these individuals would be granted these types of severance packages before their roles in the current troubles of Freddie Mac are clearly understood,” Rep. Richard Baker, R-La., a longtime critic of the two companies, told their regulator, the Office of Federal Housing Enterprise Oversight.

The regulatory agency, which is investigating Freddie Mac’s accounting, reminded the company in a letter Thursday that it must still approve the special pay deals.

Paul McNulty, the U.S. attorney for the Eastern District of Virginia, publicly acknowledged the start of the investigation on Wednesday but gave no details.

McLean, Va.-based Freddie Mac said it would cooperate in all respects with the investigation.

Freddie Mac, one of the biggest U.S. corporations with its stock widely traded, also is being investigated by the Securities and Exchange Commission.

The company said Monday that it had sacked its president, David Glenn, who also was chief operating officer, because he did not fully cooperate with an internal review of the company’s books.

Freddie Mac restated its earnings for 2000-2002 in January, after its new auditor recommended changes to its accounting policies to reflect higher earnings from the complex financial instruments called derivatives.

Congress created Freddie Mac and Fannie Mae to buy home loans from banks and other lenders to supply ready cash to the home mortgage market. The companies buy mortgages from lenders to keep in their portfolios and package others into securities for sale on Wall Street.

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On the Net:

Freddie Mac: http://www.freddiemac.com

Fannie Mae: http://www.fanniemae.com

Office of Federal Housing Enterprise Oversight: http://www.ofheo.gov

Securities and Exchange Commission: http://www.sec.gov

AP-ES-06-12-03 1908EDT