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Scott Jagow: Well, it’s happened again. The government has stepped in and announced another bailout. This time of the mortgage companies Fannie Mae and Freddie Mac. A lot of people see this as a sign of just how much the financial system stinks right now, but the markets are rejoicing. We’ll get to that in a minute. First, let’s take a look at this plan. Here’s John Dimsdale.

John Dimsdale: Secretary Paulson said he needed to save Americans’ access to home loans, auto loans and other consumer credit.

Tape of Henry Paulson: Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in the financial markets here at home and around the globe. This turmoil would directly and negatively impact household wealth from family budgets to home values to savings for college and retirement.

Treasury will inject government capital and credit as needed over the next 16 months so the mortgage underwriters don’t run out of money. Douglas Elmendorf at the Brookings Institution agrees with Paulson’s claim that incremental payments are better for taxpayers than one big bailout.

Douglas Elmendorf: The crucial step is that if Fannie Mae and Freddie Mac were covered financially after the government has put in money, that the returns for that would go to the taxpayers not to the current shareholders.

Secretary Paulson says when mortgage rates go too high, the government will buy Fannie and Freddie’s mortgage-backed securities to ease those rates, but that worries Elmendorf.

Elmendorf: That is a greater government involvement in the housing finance business than we should be aiming for.

The government’s authority to back up Fannie and Freddie expires at the end of next year. Secretary Paulson called on Congress to use that time to restructure Fannie and Freddie to be either fully public or fully private organizations.

In Washington, I’m John Dimsdale for Marketplace.