Say what you will about the recent decision by the US Government to step in on behalf of Freddie and Fannie, however, one thing is certain, the action itself is being looked at as an opportunity to get dollars flowing and confidence restored. 

Today's equity markets both domestically and abroad reacted strongly to word by the US Government that Freddie and Fannie would be immediately placed under government hands and the two CEOs of both organizations removed and replaced with financial executives with long track records of success. 

Let's face it, anytime you have a quasi-governmental organization like these two institutions things certainly have an opportunity to get messy and the boundaries of "for-profit" and "for-public good" to become fuzzy. The importance of the government's decision is centered on the fact that both Freddie and Fannie together hold or guarantee approximately $5 Trillion dollars worth of American mortgages.  To put this in perspective, as a nation we have approximately $12 Trillion in residential mortgages.  The basic idea here is that these 2 institutions are colossal and serve as proxies for overall home ownership and most importantly real estate liquidity. 

As real estate agents, brokers, mortgage professionals and other industry participants we have all seen the effects of what happens when confidence is lost and bad news byte after bad news byte publishes the ever present end of the world.  

I am hopeful that the recent government intervention, although counter to my capitalistic leaning ways, will help restore some semblance of order.  This restoration of order is most important at the critical middle-market where we have seen so much grid-lock.  With Freddie and Fannie under government stewardship maybe we can start adding the lubricant of liquidity and a boost in confidence to start making the gears turn once again.

RELATED ARTICLES:

9/6/2008 - Marketwatch - "Treasury set to bail out Freddie Mac and Fannie Mae"

9/8/2008 - Seeking Alpha Article - "Freddie & Fannie Bailout Why Now"

9/8/2008 - Yahoo / AP - "Mortgage Rates Drop After Freddie & Fannie Takeover"