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The government had invested $112 billion in the companies by the end of2OO9to keep them functioning and has committed to double that to $200 billion. This allowed the companies to generate $1.3trillion in single-family mortgage-backed securities (MBS) in 2009, up 39 percent from 2008. Their single-family portfolios have continued to decline in quality: during the quarter ended November 30, 2009, loans in any stage of delinquency increased to 7.6 percent of their combined portfolios. Most of these delin- quencies have been in their single-family portfolios; their multifamily portfolios continue to perform well. The administration said it would offer proposal for restructuring Fannie Mae and Freddie Mac in February 2010, but failed to do so; it now says 'it will not present a pro- posal until 2011, at the earliest. Thus, little is known about what the administration is thinking. However, it is unlikely that legislation reforming the companies will be enacted in 2O1O,an election year with a shortened and already crowded legislative agenda. Reforming Ronnie and Freddie will be extremely controversial. The Treasury Department announced in December 2OO9 that b would continue to provide oophaL as needed to the companies for the next three years to assure investors of federal backing and enable the companies to continue actively supporting housing markets. When the companies were placed in conservatorship, they were required to begin reducing the size of their portfolios in 2010. In December2OO9, Treasury relaxed this requirement. This will allow the companies to continue buying mortgages, which is especially important 'if the Fed's program of buying mortgage securities ends as sched- uled in spring 2O1O. There islittle reason for the administration to push for reform of the companies suthis time. The federal government is now their conservator, regulator, and primary investor. As such, it is able to use the companies as a virtual federal agency, working with FH/\ to keep the housing markets Liquid and support the administration's mortgage modification efforts. Yet the companies remain "'independent" entities because of the technicalities of the conservatorship law, so their liabilities remain off the federal balance sheet. The time to reform or replace the companies is not umiLthe housing markets recover and no longer need such active federal support. Proposals have ranged from fully privatizing them to making them federal agencies; neither alternative is likely. If they become federal agencies, their liabilities are added to an already swelling federal debt, a sensitive issue these days. Fully privatizing them, on the other hand, noises the risk that there will be no way the federal government can effectively maintain credit flows to the housing markets during credit crises, which seem to occur with annoying regularity once a decade. Housing is too large a Fart of the U.S. economy and too poLitiooUysensi- tive for the government not to have effective tools to support it when needed. Nor is it Likely that they will exit conservatorship unchanged. The old model is widely viewed as flawed, given the conflicting incentives of maximizing stockholder value and prmidingaffordablemortgagestomodecue- andmiddle-incomeAmerioons. BAN