Should Fannie and Freddie Be Killed or Kept Alive?

— By Andy Kroll | Wed Aug. 18, 2010 3:00 AM PDT

On Tuesday, the Treasury Department played host to a who's-who of the housing industry: bank executives, bureaucrats, think tankers, academics, and investors, who gathered in the ornate Cash Room to offer their two cents on how to fix the broken housing finance system, and in particular, Fannie Mae and Freddie Mac. The two housing corporations, which backstop the vast majority of America's mortgages, have had their balance sheets and reputations badly wounded in the past couple of years. Since the federal government essentially nationalized them in September 2008, taxpayers have propped up Fannie and Freddie to the tune of $148 billion. With $5 trillion in debt on their books, and no plan in place for their future, the troubled twins have become a political lightning rod and punching bags for the GOP.