Taken from the NPR website:

http://www.npr.org/templates/story/story.php?storyId=94352031

Weekend Edition Saturday, September 6, 2008 · The government is preparing to takeover mortgage giants Fannie Mae and Freddie Mac, according to reports in the Wall Street Journal and New York Times on Saturday. An announcement could come as early as this weekend.

According to sources quoted in the reports, the government is going to put the two companies in conservatorship under the control of the Federal Housing Finance Agency. Shareholders in the companies are likely to be wiped out, according to the newspapers, and the top management of the companies will ultimately be removed.

But the companies would continue to do business much has they have before, buying mortgages, packaging them into securities and selling them to investors.

Freddie and Fannie guarantee $5 trillion dollars worth of mortgages most of them prime. Housing market experts consider it an ominous sign to see those safer loans going bad.

The two companies have already reported billions of dollars in losses, and they're having trouble raising capital to cover future losses. Housing market watchers say that the economy just can't afford to have these companies fail; they are responsible for 70 percent of the mortgages. Doing so would essentially seize up the mortgage market.

What's in store for Fannie Mae and Freddie Mac? Both presidential candidates have expressed dissatisfaction with the companies in their current form. A common view is that the companies should be taken over by the government — as appears to be happening right now — and that over time the should be shrunk or broken up into small pieces and re-privatized as smaller companies.

Didn't this happen about 20 years ago in this country? But since it was the bottom dropping out of the value of properties that the Japanese bought in the US nobody seemed to scream too much about it. Now it is hitting us. Again I am not comfortable with the government taking over more and more aspects of my life. Maybe if we let them fail then the housing market will plummet and the fat cats with investments in real estate will have to actually work for a living and we the lowly ones may be able to actually afford to buy a house. Without having to go through a sub-prime bugger you in two years lender. Oh wait those are the types of folks who started this landslide of foreclosures didn't they.

Ottar yet again today