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Amazing. Just amazing. Bill Poole agrees with me:

Fannie

and

Freddie

are virtually kaput, they are insolvent. They don't have a

right

to be stocks.

I know that when I did my rant last year, it was really focused on Bill Poole, the

Federal Reserve

member who had been most opposed to my view that the Fed had to cut and cut hard. I called him a reckless man. Put aside that I called for his resignation, because he was calling for

my

resignation. Now he understands it.

Here's what I see happening: The people who own these stocks are going to lose everything. The man who understood this more than anyone in the country, Bob Steel, just jumped from the American frying pan to the

Wachovia

fire. But he was needed to figure out how to save Fannie Mae/Freddie Mac the

companies

-- forget the common stock.

We need a quick recapitalization that allows these companies to be part of a new company, Housing Corp., which is

not

public and does

not

generate a return. We need to see the bonds of the companies and the bonds of mortgages put together by the companies explicitly guaranteed despite the cost of that, and we need to see all of these things happen within the next week or two in order to make it so we have taken this big issue off the table.

I have been saying these guys are insolvent in these pages, on our videos and in "Stop Trading" and "Mad Money" for months. Now the biggest laissez-faire, "don't worry about it; we are in an inflationary environment and Cramer is a loudmouth" panicker has spoken, and we are in agreement: The stocks of Fannie and Freddie are worthless, but the companies are too big to fail.

Recap now, or else here comes U.S. gridlock.

Bear

is a pittance compared to FNM and FRE. Period. End of story.

At the time of publication, Cramer had no positions in the stocks mentioned.

Jim Cramer writes about all the stock trades in his charitable trust for TheStreet.com in Action Alerts Plus. Recent stocks he's traded in this account include Schering-Plough (SGP) , El Paso (EP) and Procter & Gamble (PG) - Get Report.

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