What does this mean that Fannie and Freddie were bailed out by the Federal Government over this past weekend?

I'm not going to go over all of the details but just try to hit some "high points."

So, here goes:

1. The Federal government now owns 80% of Fannie and Freddie. That means that the shareholders in those two companies lost 80% of their equity in the company compared to what they had last Friday.

2. Why did the Government do this? It's pretty simple. The markets had lost confidence in the long term viability of the two institutions and therefore the debt that they have issued was being questioned and their ability to finance additional housing was being called in question. This was done to stabilize and calm the financial sector of the markets which were very volatile to say the least.

3. What hasn't changed since Friday? The problems in the loan portfolios at Fannie and Freddie haven't gone away. The problems in the housing market haven't gone away. However, today the markets so far have been breathing a huge sigh of relief that says, "Yeah, Uncle Sam is here to protect us!"