More than a year after the global financial meltdown, Fannie Mae and Freddy Mac remain at the center of the U.S. government’s efforts to keep real estate afloat. So far, the government has given the two companies a total of nearly $111 billion to buy mortgages originated by others, keeping some as investments and repackaging other for sale to investors as securities.

Together, Fannie and Freddie fund 90 percent of U.S. mortgages. They also have reignited lending by state and local housing-finance agencies by guaranteeing $24 billion in debt. And they are supporting the apartment sector by lending to builders and buyers.

The situation is unlikely to change soon because by relying on Fannie and Freddie, Obama can bypass Congress. The government is running Fannie and Freddie as an instrument of national economic policy, not as a business, says Daniel Mudd, who was forced out as Fannie Mae's CEO in September 2008 when the government took control.

Assistant Treasury Secretary Michael Barr defends the status quo, saying that Fannie and Freddie are owned by the taxpayers in the middle of the biggest housing crisis in 80 years and the administration's actions have been prudent and consistent with taxpayer protection.

Source: The Wall Street Journal, Nick Timiraos and James R. Hagerty