This takeover, suspected for months, has finally arrived.  It's been widely covered in the news so read more about it here:

Boston Globe; Wall Street Journal; International Herald Tribune; CNN Money

If you're not familiar with the functions of Fannie and Freddie, please see my previous post for an introduction: What do Fannie Mae and Freddie Mac actually do?

Fannie Mae and Freddie Mac have been writing off massive losses for the past year or so.  The Treasury department has been keeping a close eye on them for months now and decided that they now need to step in to prevent a systematic failure in the credit markets if there was a run on one of them, or both.  Even prior to that, they both had their issues with accounting scandals in 2003/04.