a) had no reasons to be set up as GSEs in the first place, i.e. structured in a "Third Way" public-private "partnerships" advocated by New Democrats of DLC and Tony Blair in UK - because these partnerships' profits were great for "private" interests of management and preferred investors but the "corporate" debt was implicitly (ha!) guaranteed by the government / taxpayers.
b) were used by Democrats essentially as slush funds for "their people" (James Johnson, Franklin Raines, Jamie Gorelick, to name just most visible) and bad policy instruments by piling the debt into them and drawing profits in forms of dividends and salaries),
This shines the light on the danger of these structures for the taxpayers, which otherwise are masked by their "private" facade - profits are private for government-connected, risks and debt are public for everyone else - everyone gets to participate courtesy of government, unlike just the common shareholders in other companies.
Finally, now this implicit liability on [off-balance sheets of] governments' books that nobody paid attention to (similar to other obligations that government has but not officially in the "budget") will no longer be covert and cannot any longer be used by Democrats as unaccountable entry for their "unfunded mandates" for "community loan" programs etc. because the local banks and loan originators simply will no longer be able to pass the loans onto Fannie and Freddie without scrutiny.
This is a long overdue action of finally "divorcing" the "public", but unaccounted for [implicit, off-the books] debt from "private" profits, which will finally shine the light on loose standards and tighten the future loan requirements, which will now become accountable for by regulators / Congress, now in full public view instead of being farmed off to a "private" for-profit entity, which Democrats used the way they use government (like a slush fund and source of enrichment). Yes, there will be a pain, but it's already in process anyway, and liquidity will be granted to those who deserve it, as it should have been.
The subprime mess not only effectively shut down the home-buying market, it also turned off Fannie Mae's revenue stream. The company suffered huge losses in 2007 and predicted the same for 2008, when the federal government stepped in. Its management team was reshuffled that year. The company's position is controversial, with critics and competitors saying its federal charter gives it an unfair advantage in attracting investors and bulding market share. The company is no stranger to bad news or bad press. In 2006 federal regulators hit Fannie Mae with a whopping $400 million fine. Investigators claimed that the company's former executives willfully overstated earnings by more than $10 billion -- and then tried to impede an investigation into the discrepancies -- in order to reap performance bonuses. CEO Daniel Mudd and chairman Stephen Ashley were brought to task by the Senate Banking Committee that June in regard to accounting misdeeds. The Federal National Mortgage Association, or Fannie Mae, is a public company operating under federal charter. It is the US's #1 source for mortgage funding, financing one of every five home loans. The firm, like brother Freddie Mac, provides liquidity in the mortgage market by buying mortgages from lenders and packaging them for resale, transferring risk from lenders and allowing them to offer mortgages to those who may not otherwise qualify. As with its private-industry cohorts, the company was hit hard by the subprime mortgage crisis of 2007 and had to be rescued by the Federal Reserve.
(Source: D&B)
That is idiocy. Stop pissing on me and telling me its raining. This is theft of the taxpayer and put into the pockets of the pigmen.