"It's not entirely surprising that Fannie and Freddie haven't been taken up in the Dodd proposals because it's going to be a more complicated issue with them," says Robert Hockett, an expert in financial law and economics at Cornell Law School. He adds, however, that "no set of financial regulatory reforms that didn't at some point address Fannie and Freddie could pretend to be complete."

But there's a wide gap between Democrats' idea of reform and Republicans'. Oddly enough, Democrats fall more in line with industry proposals that would have the government continue its deep involvement in the mortgage market. Taxpayers would still guarantee losses, just explicitly rather than implicitly.

What's more preposterous is Frank's recent deflection of criticism. In a memo to other Democrats, Frank said the GSEs have already improved their underwriting standards and implied that losses related to old loans are irrelevant.

"This is an important point that has to be repeated -- as Fannie and Freddie operate today, going forward, there is no loss," Frank wrote. "The losses are the losses that occurred before we took the first step towards reforming them -- we the Democrats -- and nothing we could do today will diminish those losses."

Right.

Dodd was another Fannie-Freddie cheerleader during the housing boom, but has stepped back from the debate as he prepares to retire in the fall.

The truth of the matter may be, as Barry Sloane, CEO of Newtek Business Services, puts it: "They were huge Fannie Mae and Freddie Mac proponents, and for them to say we need to shut this down, that would be admitting a legislative failure."

The Obama administration has been largely silent on Fannie-Freddie, too, seeming to think it's best to let sleeping dogs lie until after midterm elections. But it's not clear that ignoring Fannie and Freddie will win Democrats any goodwill -- at least not among voters who are old enough to recall the firms' recent history.

There were the Clinton-era hearings about Fannie and Freddie's inherent dysfunction as taxpayer-guaranteed, investor-driven entities. Then there were the accounting scandals of the early '00s. Then there was the ultimate collapse and the ensuing losses that have amounted to $145 billion to date.

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