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[littlefish]

One major concern is if an administration went to completely wind down the 2 businesses when they are just beginning to be able to pay back taxpayers' money meaningfully.

Would be pretty hard to push something as radical as winding down Fannie and Freddie thru congress and doubt it would be allowed given the payback taxpayers (govt) are beginning to enjoy and the nascent housing recovery. If it did happen, taxpayers would probably end up with pennies on the dollar and some very large/wealthy buyers (hedgies?) would probably become sharks trying to bid off the viabler pieces of both companies.

Of course if that did happen, there'd be a huge problem with housing moving forward because of banks unwillingness to lend. Cash would be king for buying houses. Large cash buyers would win. People seeking loans would have a veyr tough time and be relegated to renting mostly.

Seems too radical to think about happening IMO unless banks (private sector) really pick up the pace of lending again for home loans. Plus the lending books for FNMA and FMCC have become drastically higher quality than when junk loans abounded.

I think the more viable option is to keep the businesses running to fully pay back taxpayers and if what FNMA CEO and CFO say about sustainable lending practices/vaible business come true and they have their loan book in order then they may be allowed to be freed of receivership after fulfilling financial obligations.

If that happens and they can show enough earnings power to maintain profitability then we could be looking at a huge ptoential windfall on the common shares. Lots of ifs and some high risk of unknowns but that's one reason i'm not going in big.

However, I will probably build a medium position. Just seems the loan protfolios these 2 companies have now are too underlyingly strong to ignore.

There is strength across the board and improving trends in many sectors of their ports.

All IMO.