It would be the mother of all bailouts if it came to pass - hundreds of billions of taxpayer dollars used to shore up the two largest mortgage companies in the United States - Fannie Mae and Freddie Mac.

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) lost a combined $11 billion last year and things are only going to get worse. These are the institutions where the moderate to high risk home buyers are usually placed and it is here that the real credit and mortgage crunch will come home to roost unless there is a turnaround soon.

Potentially, these two entities have debts totaling $5 trillion. And with both of them in trouble, the government is seriously considering taking them over and setting up conservatorships with Uncle Sam guaranteeing their solvency.

The combined losses of the two may hit $30 billion this year - more if the nightmare number of foreclosures rises at a faster rate than anticipated. Already, credit markets are making it more difficult for the two to borrow money - which is like a boa strangling a sheep. Unless both Fannie and Freddie can keep a steady outflow of loans, their situation will become even more grave until their debt burden will be so shattering that they will be unable to beg, borrow, or steal money to loan their customers. At that point, collapse becomes imminent.

But long before it gets to that point, the current proposal being bandied about the Administration is for the government to step in. Under a conservatorship, the shares of Fannie and Freddie "would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers."

As I mentioned, in a worst case scenario, that number could be trillions of dollars thus making every other bailout ever attempted by the government - including the S & L Fiasco - look like peanuts.

Let's hope it doesn't come to that.