Mortgage giants Freddie Mac and Fannie Mae will be placed into a conservator-ship by the Feds.

The plan, which was delivered by Treasury Secretary Henry Paulson and James Lockhart, director of the Office of Federal Housing Enterprise, places the twin mortgage buyers into “conservatorship” to be overseen by the Federal Housing Finance Agency. Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing.

“We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection,” Paulson said.

Both Executives have been demoted and replaced.

Yet another in a long line of Fed takeovers.  And, unfortunately, another blow to an already weak economy.  Freddie and Fannie aren’t going under, but a takeover certainly shows their weakness and what could have been an impending failure.

I still don’t think that there is anything to worry about and we’re not headed into another great depression or anything.  What we all need to realize is that in the last 5-10 years, there were a lot of really stupid loans being made (and taken) on homes.  It created the housing bubble, and that bubble is still bursting.  In the end, there will be a huge number of foreclosures and a serious cutback on new home building.  But the thing to realize is that there are plenty of people that have the money to buy those foreclosures and resell them.  Eventually, the market will come back around, we just have to get past the aftershocks of the bubble burst.