We tend to take Fannie Mae and Freddie Mac for granted. They have long been securitizing mortgages, and that expanded liquidity greatly, without a doubt. That they were government-sponsored enterprises made their guarantee seem fail-proof. But all noble securitization eventually gave way to casino practices. Now, the idea that both could actually fail has gained steam, pushing their stocks to new lows, notes Fortune. William Poole, former president of the St. Louis Federal Reserve, has been quoted as saying the entities are already insolvent. That may be overstating it, but we really do not know. This fresh worry for the industry is keeping regulators up at night. They were scrambling to reassure the markets yesterday. Plans for possibly placing the agencies in conservatorship were leaked to the New York Times. Wow! If they were to fold, the real estate market as we know it would crumble. We can't have that.

For more:
- here's the Fortune article 
- here's the New York Times article

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