INSTANT VIEW - U.S. takes over Fannie Mae and Freddie Mac

NEW YORK (Reuters) - The U.S. government announced on Sunday that it was taking control of troubled mortgage finance giants Fannie Mae and Freddie Mac, in its latest effort to shore up the slumping housing market.

KEY POINTS: * The regulator of the two companies, the Federal Housing Finance Agency (FHFA) will manage the two companies on a temporary basis. * U.S. establishes preferred stock purchase agreements to insure each GSE retains positive net worth * Treasury's Paulson told regulators wouldn't commit taxpayers funds to GSEs without conservatorship * Treasury establishing secured lending credit facility for Fannie, Freddie, Home Loan Banks * Treasury to begin buying Fannie, Freddie MBS later this month under temporary program * Herb Allison to be new CEO of Fannie, David Moffett CEO of Freddie

COMMENTS:

DOUG KASS, CO-FOUNDER, HEDGE FUND SEABREEZE PARTNERS, PALM BEACH, FLORIDA:

"The banking industry's lobbying to protect itself from losses on the preferred fell on deaf ears as well it should have. If taxpayers lose a penny, the common and preferred should and will get wiped out. Having to pay a 10 percent coupon on whatever the government gives them will assure there is nothing left over. Banks are going to have to take other than temporary impairment on their preferred holdings creating a new capital hole to fill in addition to that from credit losses. Banks will/may rally but this isn't really good news. It's not going to help credit or do anything to balance the negative effects of rising unemployment."

"Fannie and Freddie's common stock should each decline to $1-$2 early this week as they, predictably, are being dramatically diluted by the Treasury's bailout. They remain call options into the future -- but in all likelihood that future is not promising for FNM and FRE shareholders.

"From my perch, both stocks move ever closer to zero in the days and weeks ahead. Game over."

GREG MCBRIDE, SENIOR FINANCIAL ANALYST, BANKRATE INC., NORTH PALM BEACH, FLORIDA:

"This assures the availability of mortgage credit. We would see a narrowing of mortgage spreads, which are at historic wides. Part of this could be attributable to Fannie Mae and Freddie Mac. They have been buying fewer loans and stacking more fees on loans they do buy.