The consensus view holds that the worst of the housing crisis is fading into history. Friday, from the Treasury Department's Michael Stegman: "With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market." The plan is to push forward with the shrinking of Fannie and Freddie's balance sheets. This implies real reform, with reduced reliance on these troubled institutions and less exposure burdening the U.S. taxpayer (federal bailout $190bn and counting). Truth be told, Fannie, Freddie, and the American taxpayer and economy will remain highly exposed to mortgage Credit risks for many years to come. While GSE mortgage holdings (and balance sheets) have been somewhat reduced, exposure to mortgages they've insured remains at near-record levels.