Fannie Mae Destined To Become The Country's New Subprime Lender

It is odd that there is this large push to make Fannie Mae or some other government entity the new subprime lender for the nation. This push is occurring as a purported helping hand to homeowners in trouble, but who really benefits? Certainly there is a benefit to homeowners in trouble to have an opportunity for credit, but large financial institutions benefit even more by avoiding being the last stop before foreclosure. For example, here's a post from Calculated Risk about Fannie Mae originating loans at 120% the actual market value. (click)

So, I'm asking, is there a sunset to these proposals, a point in which Fannie returns to prudent underwriting standards and actual down payments? Are legislators and regulators really being upfront with the public about the fact that these loans and "investments" for Fannie Mae are toxic and going to later explode? Are we ready for a government bail-out when that happens? Or, are we going to follow the traditional path of bailing out private entities, and then, when Fannie Mae is in trouble, bemoan the ineffectiveness of government and/or call for Fannie Mae to be completely privatized or dismantled?

Those are my thoughts.