Now that's downright amazing!! Eight years since there was a Clinton administration and somehow you believe those rogues were responsible for the collapse of Freddy and Fanny?

Awesome.

Your assertion tha the takeover was just routine business operations is so disingenuous as to defy credulity.

"The U.S. government seized control of the mortgage giants Fannie Mae (FNM: 0.70, +0.21, +42.86%) and Freddie Mac (FRE: 0.51, +0.18, +54.54%) on Sunday, placing the liabilities of more than $5 trillion of mortgages onto the backs of the U.S. taxpayer.

Both companies have now been placed into a government conservatorship under the recently created Federal Housing Finance Agency, in a plan announced by Treasury Secretary Henry Paulson and FHFA Director Jim Lockhart.

The chief executives of the mortgage companies – Dick Syron of Freddie Mac and Daniel Mudd of Fannie Mae – have stepped down, but will continue to stay on temporarily to oversee the transition, Paulson said. Herb Allison, former chairman of TIAA-CREF, will take over as CEO of Fannie, while U.S. Bancorp (USB: 37.69, +0.92, +2.50%) Chief Executive David Moffett will become CEO of Freddie.

"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Paulson said, speaking at a press conference in Washington D.C. on Sunday morning. "A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance."

The Sunday announcement and themes of "too big to fail" brought stark reminders of the government's March intervention in the case of Bear Stearns, which came within hours of filing for bankruptcy.

It also brings both Fannie Mae, which was created by Congress during the Great Depression to help with home ownership, and Freddie Mac, created in 1970 as a competitor to Fannie Mae, back into the fold of the government after a multi-decade attempt at privatization.

As part of the plan, both Fannie's and Freddie's day-to-day operations will be under the direction of Lockhart. Officials provided no indication of when the government conservatorship will end. That will depend partially on the health of the U.S. housing economy, as well as the policy choices of the next presidential administration.

"Conservatorship will give the enterprises time to restore the balances between safety and soundness and provide affordable housing and stability and liquidity to the mortgage markets," Lockhart said.

As part of the government's plan to take over the companies, and to protect taxpayers, Paulson said the Treasury will receive $1 billion in senior preferred stock, with a yield of 10% a year, in both Fannie and Freddie, and will also receive "warrant for the purchase of common stock of each company representing 79.9% of the common stock of each company on a fully diluted basis at a nominal price."

The government's plan will all but wipe out any value that common or preferred stockholders have in the two mortgage companies. All dividends for Fannie and Freddie will be eliminated, Paulson said.

All political lobbying efforts by the government-sponsored entities will cease as well.

While under the direction of the government, the two companies will take additional mortgage-backed securities to help stabilize the mortgage markets through the end of 2009, Paulson said. Starting in 2010, when the housing market is expected to be recovering, both Fannie and Freddie will reduce the size of their mortgage portfolios at a rate of 10% a year.

The ultimate goal is to reduce the size of Fannie and Freddie's mortgage holdings -- around $1.5 trillion altogether -- to about $250 billion each.

Because the government controls the liabilities of Fannie and Freddie, this action could cost U.S. taxpayers billions of dollars. However, Paulson emphasized that, because of the long-term value of these securities, the taxpayer would have "a large stake in the future value of these entities."

"The ultimate cost to the taxpayer will depend on the business results of (Fannie and Freddie) going forward," Paulson said."

Do you think a takeover costing billions of dollars is "normal operation"?

And your accusation against unidentified former CLinton administration people is bizarre, unsubstantiated, and ludicrous.

It is true that the Clinton administration failed to support rigorous reining in of the FMA and FMAC organizations; and motivated by a desire to expand honme-ownership at a time when less than 65% owned homes, they encouraged growth of both organizations. They dshould have had the foresight to dampen things down.

The first signs of potential blowup were in 2003 when Freddie revealed they had understated their earnings by 9 billion dollars. The history of the two makes it clear, I think, that it was the organizations themselves, who bullied, lobbied, and PRd to keep running as they had been. This occurred all through the Clinton, Bush and Bush again administrations.

"As Fannie Mae and Freddie Mac were trying to recover from their accounting scandals, a new and ultimately mortal threat emerged. Yet again, the warnings went unheeded for too long.

The companies had begun buying loans made to borrowers with credit problems.

Fannie Mae and Freddie Mac had been losing market share to Wall Street banks, which were doing boomtown business packaging these riskier loans. The mortgage finance giants wanted a share of the profits.

Soon, the firms' own reports were noting the growing risk of their portfolios. Dense monthly summaries of the companies' mortgage purchases were piling up at OFHEO.

An employee at one of the companies said it was already a constant discussion around the office in 2004: When would the regulators notice?

"It didn't take a lot of sophistication to notice what was happening to the quality of the loans. Anybody could have seen it," the staffer said. "But nobody on the outside was even questioning us about it."

President Bush had pledged to create an "ownership society," and the companies were helping the administration achieve its goal of putting more than 10 million Americans into their first homes.

Fannie Mae and Freddie Mac's appetite for risky loans was growing ever more voracious. By the time OFHEO began raising red flags in January 2007, many borrowers were defaulting on loans and within months Fannie Mae and Freddie Mac would be running out money to cover the losses.

Finally, as the credit crisis escalated, Congress passed a bill two months ago establishing a tough, new regulator for the companies. It was too late. ..."

(From this overview).