Decision on Fannie, Freddie asset sale not made yet

— -- "They are financial institutions that could sell assets," James Lockhart, director of the Federal Housing Finance Agency, said in a C-SPAN TV interview. "Whether they will or not, certainly the decision has not been made."

Lockhart estimated between 2% and 4% of Fannie and Freddie's assets are bad mortgages.

The bailout package enacted Friday is aimed at allowing Treasury to buy soured assets from institutions that have stopped lending to each other as well as individuals and businesses.

The two government-sponsored enterprises, which were seized by the government in early September, own or guarantee almost half of the country's $12 trillion in outstanding home mortgage debt.

"It's very important for them that Treasury will be able to buy those, free up capital at those banks to make new mortgages that hopefully Fannie and Freddie can buy," Lockhart said.

The U.S. financial crisis has dealt a massive blow to the lending industry on Wall Street and in Europe, and some companies have collapsed under the weight non-performing mortgages and related securities. Some of the biggest U.S. financial institutions have failed, been bought by the survivors of the crisis or were seized by the government. Others have been forced to transform themselves.

Lockhart also said he hoped Fannie and Freddie would be profitable within two years.

One of the monumental tasks lawmakers and the next president will need to undertake next year is to determine if the GSEs will be publicly traded and backed by the government.