With the Treasury Department taking over the shows at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), both government-sponsored entities will be getting new leadership: Herbert M. Allison Jr. for Fannie and David Moffett for Freddie.

The Wall Street Journal reports (subscription required) that neither has much experience in the mortgage world. Mr. Allison was president of Merrill Lynch (NYSE: MER) until 1999, and then ran a retirement fund for college employees. Mr. Moffett has spent 30 years in banking.

Some might complain that companies in as much trouble as Fannie and Freddie need executives who knew the industry cold, but I'm not so sure. The total collapse of the mortgage financing business has demonstrated that the insiders who supposedly knew everything there was to know -- like Countrywide Financial's Angelo Mozilo -- actually knew nothing. New blood is needed.

The Journal points out that the two men have "never led major organizations through periods of extensive turmoil", but that's not really the issue here either: Fannie and Freddie's woes are the result of bad lending decisions and excessive leverage: there are no factories to be closed, jobs to be outsourced, or union contracts to be renegotiated that would require the expertise of someone like Robert S. Miller.

It's doubtful that shareholders will be happy with any solution -- but they were dumb enough to invest in a company that is insolvent. But with the feds providing oversight, these two will probably be as good at making the best of this mess as anyone.