Financial Forum - Fannie Mae & Freddie Mac

So, what does the recent bailout of Fannie and Freddie mean to you and I ???  From all the reading and research I have done, investors will take the brunt of the impact from this bailout, but that does not mean that we, as taxpayers, will be immune.  For the state of our economy, I agree with this move, but the questions that must be answered are; what is our exposure, how long will this be under government control, and when will this program go private or be changed such that taxpayer support will not be required???   Will this happen, will these questions be answered, only time will tell [my research says that mid-2009 will be the bottom, then recovery will occur] :o)

By JEFF COX, Special to CNBC.com
(Sep. 8) - The government bailout of Fannie Mae  and Freddie Mac  has given investors at least a short-term reason to believe the worst has begun to pass, but it's hardly a game-changer.   Market pros remain unconvinced that the rescue plan by itself will be enough to snuff out the Wall Street bears.

Mortgage lending giants Fannie Mae and Freddie Mac, which own or guarantee more than $5 trillion in home loans [not more than 50% of home loans], are being placed in a government conservatorship as they struggle through an extended housing slump. Combined, the two companies have lost about $14 billion over the last four quarters.

"This is another good piece of news to help us," says Nadav Baum, managing director of investments at BPU Investment Management in Pittsburgh. "Are we going straight up from here? No. But what it does is gives us a lot of confidence."

Housing will have to stabilize, banks need to get healthy, and the consumer has to escape the headwinds of surging unemployment and still-high energy prices before anyone is willing to pronounce a full recovery.

But some Wall Street watchers were at least exhaling on signs that the government would not allow Fannie and Freddie, whose presence in the mortgage market is vital to maintain bank liquidity, to fail. "Until the banks go through a quarter of not having to raise more capital, no real bull market is starting. The fact is I think we've put in a floor on the pessimism at this point," says Michael Cohn, head of Atlantis Asset Management.

"The bear market will not be over until the shorts get carried out on stretchers, the same way they got carried out when the Fed lowered the discount rate back in March," Cohn adds. "The path of least resistance is still downwards. Until there's the perception that it's dangerous to short stocks on rallies, the bull market can't start."
At the same time, some fear that the market is getting too hopeful that the Fannie-Freddie deal is a sign that government intervention will cure what ails the market.