Freddie Mac's $3 billion auction of short-term securities went well. Of course, it took news of a massive potential government bailout to undergird market confidence. This is decent news, but the issue of what to do with Fannie and Freddie remains. We all seem to agree that they are too big to fail. The two GSEs were hell bent on expansion right up until a few days ago, it seems. That has got to be reined in. It's easy to second guess their push into subprime and Alt-A mortgages, but some of that move was brought about by lawmakers who wanted to make home ownership easier. Any defense of the two giants is complicated. Accounting scandals got the headlines, but the inattention to capital, at the entities and in Washington, now seem just as debilitating. There is not a lot of goodwill built up.     

For more:
- here's an AP article about the auction

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