Fannie Mae and Freddie Mac, the government-backed guarantors of residential mortgages, hold a particularly reviled place in our political culture. They stand accused of taking a $187.5 billion government bailout (correct) and inciting the housing bubble and financial crisis (largely incorrect). And now that they've been nursed back to profitability—Fannie Mae announced this week that 2012 was the most profitable in its history —the big fear in Washington is that the mortgage giants have become " too successful to fail ." Members of Congress and Administration officials desperately want to wind down Fannie and Freddie and reduce the government's role in backstopping mortgages. But it's hard when the federal coffers are filling up with dividend payments: Fannie Mae delivered $11.6 billion in 2012 alone. But this gets the story backwards. Fannie Mae and Freddie Mac's lifeline is not extended by their profitability. It's extended by their their monopoly.