Fannie Mae & Freddie Mac:The Swan Song, going quietly into the night?

Implications: What will be the ripple affect to financial institutions if Fannie Mae and/or Freddie Mac are bailed out or taken over?  

Analysis: If you listened to the SEC, the Treasury and/or the FRB testify on Capital Hill recently Fannie Mae & Freddie Mac appear to be on their last leg, especially with total losses over 25 billion. Loans to these entities clearly did not work & if anything made the situation worse.  The problem is, if it is true that these 2 entities make up half of the US mortgage market then if they do not in some form rebound the housing market will certainly stay where it is. Unfortunately, all of this may just get aught up in politics as the some fear any assistance will not come until after the election or at least until they expend all their cash.  What many fail to realize time may not be a luxury they have.  Both are some what on track to breach their mandatory surplus threshold limits within the third quarter of this year.  Many foresee this train fully derailing within the next 2 to 3 months & some say it is chicken little again.  No matter which it is, one thing is for certain if the government gets a hold of this market it may never let go.  Watch the banks as they maneuver during this cash call. These financial issues have been around for awhile. http://www.mortgagedaily.com/ConventTab.asp