A big part of the reason that the U.S. government has had to take Fannie and Freddie Mortgage companies under conservatorship and give them each $100 billion dollars of taxpayers money is because the government allowed them to get too big, they were allowed to buy so many home mortgages and sell so many bonds based on those mortgage that when the U.S. economy entered a down cycle which it will always do eventually the resulting defaulting on home mortgages which predictably comes with a down cycle (granted this is an extraordinarily bad down cycle) ends up putting their solvency in question. The deafening chorus of experts on this matter have been saying what the government needs to do is to shrink the size of Fannie and Freddie and get multiple private sector businesses to do the work that Fannie/Freddie does, that is buy home mortgages and sell bonds based on those mortgages, to make the mortgage credit system stronger, more stable and a system that doesnt produce Fannie/Freddie calamities. Having multiple businesses do this vital work of buying home mortgages from mortgage lenders so these lenders have money to lend again is critically important so that the mortgage lending industry isnt so dependent on two business which if they catch a financial cold everyone in the industry gets financially sick and as alluded to earlier more such businesses distribute the financial risks so that in economic down cycles the financial pressure on any one business isnt so great that it makes such a business insolvent or close to insolvent where investors lose confidence in such a business and either it fails or the government has to rescue it. The government hasnt seemed to learn these lessons they are still looking for Fannie and Freddie to carry the majority of the home mortgage industry on their shoulders, it is a plan that will eventually bring disaster which America doesnt need. The government needs to come out with a plan to get multiple businesses doing this vital mortgage finance work. First, the conservator and the Federal Government need to come out with a commitment that Fannie and Freddie will never be permitted to purchase greater than twenty-five percent of the home mortgages made in America and promise that they will pursue Congress codifying this in the near future so the private business community will know there is a business opportunity here. Secondly, Fannie and Freddie are having trouble selling their bonds at a good lower rate which is causing higher mortgage rates on home loans and this all stems from investors at this time not having the optimal level of confidence in Fannie/Freddies capacity to pay these bonds when they come due, the bottom line is investors want the Federal Government to explicitly guarantee those bonds. Because of the credit crisis the Federal government is for a limited time now backing bank debt and some commercial paper why the trepidation on vital mortgage finance company debt why not for a limited time back Fannie/Freddie bonds. However, if the Federal Government does this they should compel these investors to be good participants in facilitating affordable and fair home loans for Americans, more specifically, they should mandate if these investors get federal government backing on Fannie/Freddie bonds the interest rates will be low, mandate something like in order to get the Federal Government backing the interest rate can be no higher than .5 % higher than a like termed U.S. treasury bond. In order to get other private businesses to enter the mortgage finance market why doesnt the Federal Government stoke the fire in this stove. The government should offer that the government will give a stake of $10 billion dollars to each of four companies or consortium of companies if they put up $20 billion dollars of their own money into a mortgage finance business that buys home mortgages and sells bonds backed with such mortgages. Moreover, give the same Federal Government backing on those bonds these private mortgage finance businesses sell with the same interest rate conditions given to Fannie/Freddie for these businesses first five years of operation and whose maturity is no greater than ten years. To offset the Federal Governments liability here they could charge these mortgage finance companies insurance premiums as if they were insuring sixty-percent of the debt. The government would get some minor equity interest for their ten billion stake and after ten years they would be permitted to sell this equity and they could recoup the ten billion of tax payers money spent. The government should fast track the application and selection process for this program to help the home mortgage industry get well supplied with good interest rate mortgages. This start-up help and five-year government backing assistance should facilitate diversity and financial strength in this vital mortgage finance industry. To guarantee diversity in this mortgage finance for mortgage lenders industry the U.S. government should pass a law that no one business can buy more than eighteen percent of the home mortgages made in the U.S.. To further help the mortgage finance industry, the Treasury should do the following. The Treasury has given a cash infusion of $125 billion to select U.S. banks and is in the process of giving another $125 billion to numerous other U.S. banks. The means of the cash infusion is that the Treasury gets preferred shares for the value of the money given to one of these banks by the Treasury with these preferred shares paying an interest rate of five percent. Why doesnt the Treasury go to all these banks and say that you will only have to pay an interest rate of three tenths of one percent higher than the current U.S. Treasury rate or three percent whichever is lower for all of this cash infusion that you lend out as 30 year fixed rate home mortgages with an interest rate below 5.5 % and monies that the bank gets from selling these mortgage loans has to be recycled into this fair interest rate home mortgage program for the bank to be eligible for this low preferred share interest rate; cap the percentage of cash infusion that is eligible for this low interest rate program to twenty-five percent so that these banks will have plenty of money to do other type of needed lending for America. These above described types of U.S. government actions should juice the home mortgage industry in the U.S. and get it reliably back on the right track.