The Economist looks at the current state and projected fate of Fannie Mae and Freddie Mac as configured, post-bail-out, government-controlled vacuums of profitability.
After third quarter losses of $475 million announced by Freddie Mac ignited talk of the possibility of a need for a second bailout, the Economist speculates that lawmakers may get the political will finally to act on reform measures. The operative term there is "may."
Getting the government out of the housing market will be difficult. Every time Fannie or Freddie guarantees a new long-term mortgage, the Treasury’s backstop is in effect renewed for 30 years. Last year Fannie and Freddie stood behind half of new mortgage lending, according to Inside Mortgage Finance, a newsletter (other government agencies guaranteed a further 20% of lending). Politicians who withdraw this support, or raise its price, risk being blamed for any subsequent housing slowdown. In any case, most want to retain a government guarantee of some sort; many Democrats, especially, want the agencies to boost lending to minority groups.