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Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said.

The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.

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Under a conservatorship, the common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. Shareholders have already lost billions of dollars as the stocks have plunged more than 80 percent this year.

A conservatorship would operate much like a pre-packaged bankruptcy, similar to what smaller companies use to clean up their books and then emerge with stronger balance sheets. It would allow for uninterrupted operation of the companies, crucial players in the diminished mortgage market, where they are now responsible for nearly 70 percent of new loans.

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Fannie Mae and Freddie Mac occupy a complicated place in the nation’s financial system, but the more you understand what they did, the angrier it should make you — especially since it’s likely that you, the taxpayer, will wind up having to pay for their sins.

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That would be hard enough to swallow if the cause had, in fact, been the companies’ willingness to finance low-interest loans to working-class home buyers. But the real reason was greed. You know that statistic you always hear about how half the nation’s $12 trillion in mortgages is “touched” by Fannie or Freddie? The implication, of course, is that the two companies are the very heart and soul of the nation’s housing market. But the majority of the mortgages in question are ones that are held by Fannie and Freddie as part of their gigantic portfolio of mortgage-backed securities — the same kind of complex derivatives that brought down Bear Stearns and have caused untold pain to most of the big Wall Street firms.

Holding those securities has nothing to do with “the mission.”

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The problem is that while the two companies are still called government-sponsored entities, they are also publicly traded corporations. And for much of the last two decades, they have been hell-bent on growth, the clear goal being to push up their stock prices. “Wrapping” mortgages for banks — you can make money doing that, but you can’t double your earnings every five years, which was the stated goal of the former Fannie Mae chief executive, Franklin Raines.

Ah, but if you buy up the mortgage-backed securities yourself, taking on the interest rate risk as well as the credit risk — all the while using your government-sponsored pedigree to borrow at lower rates than your Wall Street competitors — well, then you’ve got a spectacular growth business. And if you’re the C.E.O., with lots of stock options and bonuses based on stock price and profits — as Mr. Raines was — you can put tens of millions of dollars in your pocket, too. The mission? It was little more than a fig leaf that the companies trotted out whenever somebody pointed out the obvious: that its growing portfolio of mortgage-backed securities was dangerous

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Then, in 2003, came the accounting scandal. Fannie Mae had to restate $9 billion in earnings, and Mr. Raines, who had made $90 million during his six years as chief executive, lost his job, replaced by Mr. Mudd, who had been his No. 2. (Mr. Raines never had to give back any of the money, though.)…So how did Mr. Mudd and Mr. Syron respond? Did they decide to pull back, take less risk and act as a stabilizing force in the market? Not even close. Like their predecessors, Mr. Mudd and Mr. Syron put their investors — and their bonuses — first, and their mission a distant second. As we are now learning, in 2005 and 2006, the two men plunged their companies headfirst into subprime mortgages — and continued doing so even as the subprime market began to implode

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These are the loans that Mr. Syron is now claiming were made to comply with “the mission.” But the mission had nothing to do with it. Fannie and Freddie got involved with subprime mortgages for the same reason as everyone else on Wall Street: they offered higher rates of return than ordinary mortgages. Why? Because they were riskier. As we now all know.

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But let’s at least acknowledge that there is something deeply flawed with an arrangement in which the shareholders and executives reap the profits in good times, while the government and the taxpayers absorb the losses when things go awry. At the very least, the companies should stop using the mission as an excuse, and acknowledge they did the wrong things for the wrong reason. Their only mission has been to get rich, and it has hurt us all.

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