MarketWatch has some news from Washington. "A senior Treasury official warned that Fannie Mae and Freddie Mac shouldn't expect government assistance if they get into financial trouble. In a speech to a real estate group, Treasury Undersecretary Emil Henry said past government bailouts don't mean the government will act again."

"'Past actions, especially in the case of government bailouts, are not a good predictor of future actions,' Henry said in prepared remarks to a real estate roundtable. 'And,' Henry asked, 'do we really want to continue down a path that could lead to irresponsible calls for an unnecessary and preventable GSE bailout?'"

"Legislative action has been stalled in the Senate over the issue of limiting Fannie and Freddie Mac's massive holdings of mortgage-backed securities. Signs are emerging this week that the administration may not be willing to wait for congressional legislation to reform Fannie Mae."

"On Tuesday, Treasury Undersecretary Randal Quarles said his agency will review the process it uses to approve requests by the mortgage companies to issue debt. Secretary Alphonso Jackson said separately on Tuesday that the Department of Housing and Urban Development would probe whether Fannie Mae and Freddie Mac are improperly holding billions of dollars in assets and liabilities."

From Reuters. "Fannie Mae's $11 billion in accounting errors cost shareholders some $25 billion to $30 billion in losses, the acting director of the Office of Federal Housing Enterprise Oversight told a Senate panel on Thursday."

"The acting director of Fannie Mae's regulator on Thursday said the agency continues to find control problems at the mortgage finance company. James Lockhart, acting head of the OFHEO, said he agreed with studies from the Federal Reserve that conclude that the investment activities of Fannie and its sibling government-sponsored enterprise Freddie Mac provide little if any benefit to homebuyers."

"U.S. Assistant Treasury Secretary Emil Henry Thursday cited 'new and troubling revelations that Freddie Mac's accounting and internal controls continue to be in disarray.'"

"Henry said of Freddie Mac that 'they have recently reported that they can 'begin' the registration process' with the Securities and Exchange Commission only after releasing full year 2006 results. 'Is it reasonable for Freddie Mac to begin this process over five years after announcing that they would register with the SEC?' the Treasury official asked."

"Just as troubling, he said, is Freddie Mac's recent announcement that it needs to limit the number of internal controls initiatives and defer 'lower priority' internal control efforts."

"'As a former Wall Street banker, I can tell you that I cannot imagine any non-GSE company being able to maintain its status in the capital markets with such an unremedied speckled past,' Henry said. 'Indeed, one (sad) irony of this situation is that the two entities that impose some of the most systemic risk to our system are held to some of the lowest standards of accountability.'"

"Fannie Mae's top regulator said Thursday that his agency has discovered new 'control problems' at the mortgage giant as recently as several weeks ago. James Lockhart said both Fannie Mae and Freddie Mac will take several years to correct their internal control problems."

"'Neither of these companies are timely reporting at this point,' he said. He said Fannie Mae and Freddie Mac 'are not even close to conforming with Sarbanes Oxley, at this point.' 'These companies were so poorly run that it is going to take many years to fix,' he said."

"'Fannie and Freddie, along with their trade association allies, cannot continue to block the Senate from taking up this bill,' said Sen. John Sununu. Sen. Chuck Hagel said Congress has been continually warned about the risks posed by Fannie Mae's and Freddie Mac's activities. 'We have been warned time after time, year after year, about the systemic failure that's at risk here. And my goodness, when will the Congress act?' he said at a Banking Committee hearing."