Time to Rethink Fannie and Freddie

As the White House pushed for a Wall Street overhaul this year, Republicans hammered Democrats for ignoring two of the biggest problems in American finance: Fannie Mae (FNM) and Freddie Mac (FRE). The government-backed mortgage giants have cost taxpayers $145 billion and counting. Now, with work on the 2,300-page financial-regulation bill all but complete, the Obama Administration will soon turn to revamping the pair of institutions that own more than half the nation's $11 trillion in residential mortgages. The political struggle could be long and bitter.

Some Republicans in Congress contend that killing Fannie and Freddie is the only wise course. President Obama is expected to advocate something closer to the rough consensus for moderate reform emerging among Washington lobbyists representing banking, real estate, and consumer groups.