A pair of key senators on Thursday urged President Barack Obama to name a permanent regulator for Fannie Mae and Freddie Mac, the mortgage finance giants seized by the government almost two years ago at the height of the financial crisis.

Edward DeMarco, a career civil servant, has been acting director of the Federal Housing Finance Agency since September 1, 2009. FHFA acts as both the independent regulator and the conservator of two firms often referred to as government sponsored entities, GSEs.

Senate Banking Committee Chairman Christopher Dodd of Connecticut and the panel's top Republican, Alabama Senator Richard Shelby, on Wednesday wrote a letter pressing Obama to fill the FHFA position as well as choose someone to run the newly created Consumer Financial Protection Bureau and name a vice chairman for supervision at the Federal Reserve.

The condition of the financial system, while improving, continues to warrant close supervision and oversight, Dodd and Shelby wrote in the letter, released on Thursday.

Elizabeth Warren, the fierce consumer advocate and Harvard law professor who heads the congressional oversight panel for the $700 billion bank rescue, is considered a top contender for the consumer bureau, which was originally conceived in a paper she wrote in 2007.

Treasury Secretary Timothy Geithner has repeatedly sparred with Warren in her capacity as watchdog for the rescue program. Consumer advocates and liberal lawmakers are lobbying for Warren to get the post in an attempt to force Obama to tap her as the only choice.

Geithner has praised Warren effusively in recent television interviews, though he has stopped short of endorsing her for the job. White House spokesman Robert Gibbs has also praised Warren, though he said last week there would be no imminent announcement on who would run the new consumer protection bureau.

Public debate about the future of the U.S. housing finance system is heating up, as Republicans on Capitol Hill see the lack of action on Fannie Mae and Freddie Mac as an issue they can capitalize on in the November mid-term elections.

Combined, Fannie Mae and Freddie Mac, which buy mortgages and free up lenders to lend again, have taken more than $145 billion from taxpayers since then-Treasury Secretary Henry Paulson seized them in 2008 as mortgage losses ballooned.

(Additional reporting by Alister Bull, Editing by Kenneth Barry)

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