Both companies finance more than 80% of the US housing market, what this means is a massive subsidy for US homeowners. Future taxpayers (as the US is in budget deficit) will pay to prop up the property market now.
Reuters reports Barack Obama supports it as being necessary, but welcomingly said "In our market system, investors must not be allowed to believe that they can invest in a "heads they win, tails they don't lose" situation." Which of course, is what has happened.
It also reports John McCain also supports it, but also this:
""The long-term reforms are to scale down Fannie and Freddie so their size is no longer a threat. And then privatize them. Get them off the taxpayer's books entirely," said McCain's chief economic adviser, Douglas Holtz-Eakin.".
Meanwhile, according to Bloomberg former Federal Reserve Chairman Alan Greenspan criticises the bailout saying the companies should have been nationalised, given the shareholders nothing and privatised the two companies into many smaller firms.
These two firms were government creations, as part of the New Deal. It's about time the US economy was no longer dependent on them both. As Not PC said, they should have been allowed to fail. Bailing them out is taking money from those who didn't take those risks, it delays and reduces future tax cuts. The money for the bailout does not come from trees, it comes from people.
As Paul Gigot in the Wall Street Journal writes:
"Even now, after all of their dishonesty and failure, Fannie and Freddie could emerge from this taxpayer rescue more powerful than ever. Campaigning to spare taxpayers from that result would represent genuine "change," not that either presidential candidate seems interested."
As it is a fait accompli, the best that can hoped for is to take Greenspan's solution, fully nationalise the institutions, split them and sell them. Ensure these creations of government are returned to the dustbin of history.