NEW YORK (TheStreet) -- Warren Buffett of Berkshire Hathaway (BRK.A) has said that the government's conservatorship of Fannie Mae (FNMA) and Freddie Mac (FMCC) contained the terms he'd normally seek out when infusing capital into a struggling company. Now, five years after the U.S. Treasury's bailout of both government sponsored mortgage giants, one wonders whether the Oracle of Omaha might be enticed by Fannie and Freddie privatization bids.

Currently, Fairholme Capital Management is offering to infuse $52 billion in Fannie Mae and Freddie Mac, in an effort to bring private capital to both GSEs' traditional mortgage-backed securities insurance business. The deal would liquidate Fannie and Freddie at a profit to the U.S. Treasury, Fairholme said in a recent presentation, and put the private market behind new mortgages issued in 2014 and beyond.

Holders of Fannie and Freddie preferred stock would have their claims exchanged for new equity in the MBS insurance business and they would inject an additional $17.3 billion through a rights offering. Fairholme's proposal would also rely on the creation of two new state-regulated private insurers to recapitalize Fannie and Freddie and underwrite new business without a federal charter.

It is the latter that might intrigue Berkshire Hathaway, even if Buffett were reticent to invest directly in Fannie and Freddie's private recapitalization.

A source familiar with Fairholme's proposal said the fund reached out to a host of insurance companies when putting together its initial privatization plan.

Given Berkshire's history with GSEs and its exposure to the housing market, it wouldn't be a shock if the company were interested in participating in a private mortgage insurance regime to replace the federal government's backstop. However, the resolution of Fannie and Freddie already has competing House and Senate bills, in addition to common and preferred shareholders whom expect a payout for their holdings.

Fairholme also has relationships with other large U.S. insurers. The fund is a large shareholder in insurers AIG (AIG) and Leucadia National (LUK). Fairholme even references its crisis-time investment in AIG in it GSE plan.

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