Freddie and Fannie to come under government control

The thinly capitalized Fannie Mae and Freddie Mac will come under government control this weekend. Shareholders are likely to be toasted but bond holders will cheer. Spreads will narrow and mortgage rates will fall which should ultimately benefit the housing market.

The scandalous behavior of these institutions will finally come to an end as Freddie and Fannie lobbyists and CEOs join the swelling ranks of the unemployed. Good riddance.