WASHINGTON (Reuters) - Fannie Mae (FNMA.OB) Chief Executive Michael Williams said on Tuesday he was stepping down from the government-controlled mortgage firm, which is at the center of a fight over how to reduce foreclosures. He will depart after a successor is appointed to lead the country's largest provider of U.S. residential mortgage funding. Williams began working at the mortgage firm in 1991. He was appointed CEO in 2009 after Fannie Mae and its sister company, Freddie Mac (FMCC.OB), were seized by the government at the height of the financial crisis as mortgage losses mounted. The two companies have soaked up about $169 billion in taxpayer support since being placed in conservatorship. To provide funds for housing, the two congressionally chartered companies buy mortgages from lenders and repackage them as securities for investors, which they then guarantee. Ahead of the financial crisis, they already played an outsized role in the mortgage market. But as private mortgage financing evaporated after the housing bubble burst, their footprint has grown even larger. Along with the Federal Housing Administration, they now provide the funds for about 90 percent of all new U.S. mortgages. Even so, the Federal Reserve last week recommended expanding their role to help combat foreclosures and revive the downtrodden housing market. William Dudley, the influential president of the New York Federal Reserve Bank, argued that loan principal reductions should be considered. But Republican lawmakers have said the central bank was overreaching with its authority. The regulator for Fannie Mae and Freddie Mac has only allowed the Obama administration to use the firms for targeted foreclosure prevention programs. Williams and Freddie Mac CEO Charles Haldeman have faced pressure from Congress to rein in executive compensation. The firms have paid out $12.79 million in bonuses for 10 executives. Both have argued that the hefty pay packages were needed at a time the future of the two firms was making it difficult to attract and retain staff. The Obama administration, and Democratic and Republican lawmakers all agree that Fannie Mae and Freddie Mac eventually need to be shuttered to reduce the government's role in the mortgage finance market. However, they disagree over how quickly to unwind the money-losing firms and whether there is still a role for the government to play in the mortgage finance industry, especially when the weak housing sector has hurt the economic recovery. Williams, who worked his way up the ranks from the head of the company's eCommerce division to chief operating officer and eventually CEO, helped reform Fannie Mae's control standards after an accounting and financial restatement scandal.