NY Times, July 11, 2008, article by Stephen Labaton and Steven R. Weisman. U. S. Weighs Takeover of Two Mortgage Giants.
Synthesis-
Bush administration officials are considering having the government place one or both of the companies in a conservatorship. A conservatorship would have sweeping powers to overhaul them, but would not have the authority to close them.
The shares would be worth little or nothing, and any losses on mortgages they own or guarantee- which would be staggering- would be paid by taxpayers !
The securities of Fannie and Freddie are held by investors worldwide.
Some $5 trillion of debt owned or guaranteed by the companies. Overall, all mortgage holders own or back $12 trillion in mortgages- (thus other companies have $7 trillion worth of the problem).

Freddie is technically insolvent under fair value accounting rules, in which the company puts a market value on assets if it had to sell them now.

Analysts expect the companies to announce a new round of write-downs and possibly be forced to raise capital by issuing additional shares, which would dilute their value for current shareholders. (Remember that many of us, through savings and loans, bank savings, mutual funds, pension and union funds, direct investment, etc., own a part of Fannie and Freddie).

The article is quite long; if you are interested go to the NY Times website and search for the article. Sentences in () above are mine.

Do Americans wish to nationalize $12 trillion in debt? I don't think so! But it does seem that action to conserve the companies is necessary.