Options for overhauling Fannie Mae and Freddie Mac, the government-run mortgage-finance companies, may eventually include liquidating their assets, according to a document released today by the Obama administration.

The Office of Management and Budget also projected today that the companies, which have received or requested $78.8 billion in aid since their federal takeover in September, will need at least $92.2 billion more by Sept. 30. The Treasury Department doubled an emergency capital commitment for each company in February to $200 billion.

Alternatives under consideration range from “a gradual wind-down of their operations and liquidation of their assets,” to returning the two companies to their previous status as government-sponsored enterprises that seek to maximize shareholder returns while pursuing public-policy goals, according to the document released by the OMB.

Shutting Down Fannie and Freddie is the only option worth discussing. The focus should be on how, rather than if.

In the meantime, please note that the taxpayer bill is up to $171 billion and counting from $78.8 billion. Does remember the lie that taxpayers would not lose a dime on this? The sooner that Fannie and Freddie are shut down, the better off everyone will be.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

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