Freddie Mac-No Politics (FMCC)

[quikrete]

THIS IS INTERESTING.Fannie and Freddie, which own or guarantee roughly $5.3 trillion in U.S. mortgage debt, have been posting steep quarterly losses with no end in site. As their condition worsened, a government rescue became inevitable because their two quasi-government lending giants had become too big to fail.

Their stocks plummeted Monday and have lost nearly all their value in the last year.

While the outlook seems dire, some argue that it won't just be a race to zero for stockholders. If the ultimate solution is a privatization of the companies, the stock could recover.

That depends on whether the firms in a private form would have any connection with the government. The prevailing sentiment is, once the conservatorship ends, the explicit and implicit ties to the U.S. government would be severed. It's not clear how an independent Fannie and Freddie would fare in a market where competitors are bound to emerge