Fannie Mae Escapes the Clutches of the Bush Administration

What you are seeing now is the release of Fannie Mae from the clutches of the regulators, including former Bush roommate James Lockhart, who in the name of trying to stop an organization known as a Democratic Party giveaway, almost caused -- and still may cause -- a bailout so enormous that it could drive our own nation into a trillion-dollar bailout.

Now you see Freddie Mac (FRE - commentary - Cramer's Take) and FNM lift. If they have to sell equity to clean up their books, they can do it now. The problems in the mortgage market will now settle down, and rates will go lower. We could be near the end of the most major part of the housing crisis as we get closer and closer to the end of the vicious resets and the beginning of the Fed's plan to expand the use of bond collateral for cash next week and the Congressional plan to make Fannie Mae take loans that are in the $700,000 range.

This was all political and so dumb it is scary.

The last phase of this rescue must come with the Fed going in to buy Fannie Mae paper itself. That will enable more of the stuff to be retired and free up the trading desks of places like Merrill (MER - commentary - Cramer's Take) and Citigroup (C - commentary - Cramer's Take) before they, too, go the way of Bear Stearns, although Citigroup is too big to find a buyer.

Things are getting better. That's why the rally and it will continue as long as the Treasury, at last, takes its responsible non political and non-laissez faire course.

At the time of publication, Cramer was long Annaly.

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