Fannie/Freddie(WSJ MarketBeat) Even the most hard-line opponents of any kind of intervenion in the markets are a bit less strident about the move by the federal government to back Freddie Mac and Fannie Mae, the beleaguered mortgage guarantors.

Shares of the companies were rallying in premarket activity, gaining 35% each, respectively, after the Treasury Department and Federal Reserve announced plans to seek Congressional approval for an increase in an existing line of credit for the companies.

“Ultimately, what the GSEs needed was a bridge loan. The government is essentially guaranteeing one will be available regardless of market sentiment,” wrote analysts at Barclays Capital.

The possibility exists that the Treasury will seek temporary authority to purchase equity in the government-sponsored enterprises, again raising the spectre of moral hazard that some have argued allows companies to balloon their risk without fear of failure.

“The Fed had to do something—we’re talking $5 trillion of U.S mortgages here—as these were their babies,” writes Todd Harrison, CEO of Minyanville.com, who adds, however, that this scheme can be boiled down to “private gains, socialize losses.” He isn’t alone in this opinion, as many analysts wonder why (unlike Bear Stearns Cos., where equityholders were not made whole) the GSE shareholders are being thrown a lifeline.

“The debt holders and the US government are the true economic owners of the GSEs,” writes Christopher Whalen, managing director at Institutional Risk Management. “Throw the shareholders a bone with a swap offer for debt, say ten cents on the dollar of book, and kill the public listing pronto.”

Bailout
With the Federal Reserve already out in full force to backstop the commercial banks and investment banks through multiple acronym-lending facilities, the Wall Street Journal wonders today just how many bullets the Fed has left. “The high-profile shock treatment that the Fed used last autumn and winter — most notably, a series of sharp interest-rate cuts — isn’t as readily available anymore,” writes E.S. Browning, in today’s WSJ.

Equity rebounds have proven fleeting in this environment, and the idea that the credit crisis will dissipate on this news is also overly hopeful. The housing markets continue to sag, and consumer spending has diminished. The Dow Jones Industrial Average futures are up 119 points in premarket action, while the S&P 500 futures have gained 17 points.

Stock markets may have a positive initial reaction from a deeply oversold position,” writes David Kotok, CEO of Cumberland Advisors in Vineland, N.J. “Once this rally is over, the markets will have to confront the economic realties of our housing/energy/food/election-uncertainty/economic slowdown/pressured-consumer/large deficit/weak dollar situation.”