Meanwhile, as everyone's attention is focused on the gulf

From the New York Times:

Cost of Seizing Fannie and Freddie Surges for Taxpayers
Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation's largest landlords.

Bill Bridwell, a real estate agent in the desert south of Phoenix, is among the thousands of agents hired nationwide by the companies to sell those foreclosures, recouping some of the money that borrowers failed to repay. In a good week, he sells 20 homes and Fannie sends another 20 listings his way.

"We're all working for the government now," said Mr. Bridwell on a recent sun-baked morning, steering a Hummer through subdivisions laid out like circuit boards on the desert floor.

For all the focus on the historic federal rescue of the banking industry, it is the government's decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.

Link is to a 30 Page PDF document at the CBO. Here is the New York Times on September 11, 2003:

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

Emphasis mine -- of course, the Democratic majority in Congress would not allow such a loss of power so the plans for the agency fell through. Now, a word from the same article about the stock prices:

The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

And now another story from the New York Times, June 16th, 2010:

Fannie and Freddie Falling Off the Big Board
The mortgage financing giants Fannie Mae and Freddie Mac are at last slipping into a form of obscurity. The companies will delist from the New York Stock Exchange under order of their federal watchdog. When they start trading in the penny stock market, investor attitudes may change - but the government fiction that the two are private companies almost certainly won't.

The ostensible rationale for the Federal Housing Finance Agency's directive to move them off the big markets is that Fannie's stock lately has averaged less than the $1 minimum price required by the N.Y.S.E., while Freddie's has fallen close to that level. With no obvious argument to reset their share prices, a delisting was inevitable.

More significant, the two companies cannot continue pretending to act in the interests of public shareholders while behaving as arms of the government. Fannie and Freddie are propping up the residential housing market. They end up holding or guaranteeing almost all new mortgages, and their regulator wants them to back more home lending to people who, with the best will in the world, can scarcely afford the payments.

Heh -- a nice bit of Schadenfreude Of course, we mustn't forget Barney Frank's involvement in this bit of nastiness. From the 2003 N. Y. Times article:

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.

All the while he was living with Herb Moses -- from the Business and Media Institute, September 24th, 2008:

Media Mum on Barney Frank's Fannie Mae Love Connection
Are journalists playing favorites with some of the key political figures involved with regulatory oversight of U.S. financial markets?

MSNBC's Chris Matthews launched several vitriolic attacks on the Republican Party on his Sept. 17, 2008, show, suggesting blame for Wall Street problems should be focused in a partisan way. However, he and other media have failed to thoroughly examine the Democratic side of the blame game.

Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae's main defenders in the House - Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 - was once romantically involved with a Fannie Mae executive.

The article goes into great detail with links to citations. Time to drain the swamp and start over again...