The U.S. government placed Fannie Mae and Freddie Mac in conservatorship in September 2008: "This means that the U.S. Taxpayer now stands behind $5 trillion of GSE debt," according to the Congressional Research Service.

The problem is that $5 trillion of so-called agency paper is not treated as if it is a debt of Uncle Sam for accounting purposes, says Richard Suttmeier, chief market strategist at Niagara International Capital andValueEngine.com.

"Get it on the balance sheet - that's where it belongs," Suttmeier says. "Add it to the $14.2 trillion in [federal] debt and let's move on."

Another Time Bomb Ticking But $5 trillion is a lot of money - even by government standards -- and moving on may be the problem because ofongoing problems in the housing market, Suttmeier says. "There's a general concern on Main Street U.S.A. that ‘my neighbors are throwing in their keys, there's more for sale signs in my community...do I want to buy a new home, risking there's still downside risk to housing?' "

Noting the Case-Shiller 20-City Home Price Index is still 50% above 1999 levels and mortgage delinquencies are still rising despite the rebound in GDP, Suttmeier says "victory is nowhere in sight, particularly when the drain we're going to see from Fannie and Freddie is unlimited losses between now and the end of 2012 -- on top of the $400 billion that's already been allocated."

Coincidentally (or not), the FDIC is allowing U.S. banks until 2012 before forcing them to fully write-down bad or toxic loans, which is "another time bomb ticking," Suttmeier says. "They're hoping the public market comes back into the mortgage arena, which is going to be hard to do."

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