We have a whole bunch of people talking about what should be done with Fannie Mae and Freddie Mac, starting with the Wall Street Journal editorial page, which suggests that Treasury Secretary Paulson put the GSE’s in receivership.

Of course, the WSJ has always hated Fannie and Freddie, because they are sort of public, which, by the standards of their Neanderthal sensibilities, is evil, so this position is far from a surprise.

Of more significance are the statements of William Ackman, who manages a hedge fund, and made big bucks short selling the monoliner insurance companies.

He’s betting against the GSEs:

Ackman, 42, has his own plan that would see Fannie Mae raise about $86 billion in capital by giving investors in $750 billion of senior unsecured notes 90 cents on the dollar in debt of a new company, with the balance in equity. Investors in Fannie Mae’s $11 billion of junior debt would get warrants, while common and preferred shareholders would get nothing, according to Ackman.

Not surprisingly, when talk like this is coming from Wall Street bigfoots, Moody’s cut the financial strength ratings of both GSEs to B-, and not surprisingly, their stock dropped by double digits today.

In my humble opinion, the upper management and stock holders need to lose, and lose big, or we will be back here in a few years.

Protecting share holders and upper management should not be a part of any bailout.