Will Fannie & Freddie Step In?

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In this article by KTLA about the subprime market meltdown is this paragraph:

The Housing and Urban Development Department also has suggested that the largest mortgage companies, Fannie Mae and Freddie Mac, consider giving strapped borrowers more time to repay their loans, Alphonso Jackson said at a House hearing.

While this sounds great on paper it will not change much in terms of the current meltdown. Freddie and Fannie have already said that their portfolio of subprime mortgages are rather small. So any forebearance agreements that they extend to their customers would only be protecting the prime market. Most of the subprime loans were written by mortgage banks, funded by Wall Street investors. These are the loans in trouble. Some banks may arrange forebearance for their borrowers, but each of these banks are separate entities and will likely develop separate solutions to manage their loan portfolios.

Congress, the White House and others will hold a lot of hearings, have plenty of sound bites for the press, and purport to be finding an answer and a solution. At this point, the problem will not be solved by government actions. This is a perfect case of the government trying to look good, but not really solving much of the problem.