In a separate appearance on CNBC, Paulson said "we obviously don't know" when asked how much the takeover could end up costing taxpayers. He said that will depend on how quickly the housing market turns around.
Marilyn Cohen, CEO of Envision Capital, called the takeover a "doomsday scenario in the short haul" for investors.
"Clearly, the investors that own the common and preferred [stock] are psychologically and financially devastated," she said. "The question is: Will there be -- over a certain period of time -- recovery that makes it worthwhile to hold on."
Cohen said that at some point the housing market will hit a bottom and recover and eventually Fannie and Freddie could make a profit.
"If the Treasury gets its money back and there are profits, there may be enough then to trickle down to the preferred shareholders, maybe the common, but who knows," she said. "There have been weirder things that have happened in the financial markets. Everybody thought that when Chrysler went under that the government would never get its money back. It not only made its money back, but it made a huge profit. "
The Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke. In exchange for the bailout, the federal government will receive senior preferred stock. If the industry and the companies, the government could actually recoup its massive investment.
The congressionally chartered companies -- the two largest sources of U.S. housing finance -- have suffered combined losses of nearly $14 billion in the last four quarters. Just two months ago, government officials assured the public that Fannie and Freddie had enough cash to weather the storm. But Sunday, the government said the losses on the mortgage giants' books were a lot bigger than they knew.