Freddie Mac has a new CEO CFO and his name is Ross Kari. Can you guess his compensation? Is it reasonable in light of the fact that Freddie Mac is controlled by the government?

In these days when we have 5.4 million people who have been on unemployment for at least six months, Kari's compensation is $5.5 million, which includes $2 million as a signing on bonus and a generous salary of $2.3 million.

If you're wondering why Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have been bombarded by selling pressure today, look no further than this Wall Street Journal article (subscription required). The newspaper reports that the Mortgage Bankers Association (MBA) is pushing for the government to split up Fannie and Freddie "into several smaller privately held companies that would issue mortgage related securities carrying an explicit government guarantee."

Under the terms of the proposal, Fannie and Freddie's offspring would no longer be permitted to sit on massive mortgage portfolios. Additionally, all mortgage-backed securities created by the duo would be backed by a federal insurance fund, replacing the rather abstract implied government guarantee that's currently in place.

TheStreet.com's Jim Cramer says the bizarre rules these days make it worth looking at stocks through a different lens.

How much should we care about low-dollar speculation? How much should we care about the incessant trading in CIT (NYSE: CIT) (Cramer's Take) and Fannie Mae (NYSE: FNM) (Cramer's Take), Alcatel-Lucent (NYSE: ALU) (Cramer's Take), or Vonage (NYSE: VG) (Cramer's Take) and Sprint (NYSE: S) (Cramer's Take)? Or even Citigroup (NYSE: C) (Cramer's Take)?

First, I have to tell you that I worry about it less than I used to. Why? Because when we used to have rules and government officials that were willing to speak the truth about stocks, we wouldn't have these single-digit players out there every day. But without it, how in heck can people not believe that Fannie and Freddie Mac (NYSE: FRE) (Cramer's Take) are the biggest and best bets on a turn in housing?

Fannie Mae (NYSE: FNM) closed at $1.86. FNM option volume was active on August 25 with 173,103 contracts trading. FNM overall option implied volatility is at 151.

Freddie Mac (NYSE: FRE) closed at $2.06. FRE option volume was active on August 25 with 53,469 contracts trading. FRE overall option implied volatility of 139 is near its four-month average of 138, according to Track Data.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Earlier today, Colonial BancGroup (NYSE: CNB) fell nearly 12% to 41 cents per share before trading was halted pending a news announcement. As it turns out, the troubled bank is being taken into receivership by the Federal Deposit Insurance Corp. (FDIC), while BB&T Corporation (NYSE: BBT) will acquire all of CNB's branches and deposits.

The announcement comes on the heels of a report in The Wall Street Journal (subscription required) that a federal judge has granted a temporary restraining order to freeze $1 billion of Colonial BancGroup's assets. The decision comes after Bank of America (NYSE: BAC) filed suit against CNB, seeking to protect its rights as trustee to $1 billion of loans received from Freddie Mac (NYSE: FRE). U.S. District Judge Adalberto Jordan ruled in Bank of America's favor, citing his concern that Colonial "is on the brink of collapse."

The government is in another pickle. Last September, Freddie and Fannie were effectively nationalized when the Fed stepped in and promised to buy $100 billion of preferred shares in each company and created warrants effectively diluting existing shareholder holdings.

Now the government finds that they have taken on a mountain of debt and wants out of this mess. According to the Washington Post, talks are underway to split the assets of the two companies along the lines of good bank/bad bank.

Outspoken congressman Barney Frank has no shortage of critics, and they're sure to be out in force today. This morning, The Wall Street Journal reported that the chairman of the House Financial Services Committee, along with his colleague Anthony Weiner, is actually recommending that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) relax their lending standards on condominiums.

The controversial request follows a decision by both Fannie and Freddie to tighten mortgage-lending standards for condos. In March, Fannie said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of units have been rented, up from its previous benchmark of 51%. Freddie is due to implement similar measures in July. In a letter to the CEOs of both mortgage lenders, Reps. Frank and Weiner expressed their concerns that the higher standard "may be too onerous," and asked the lenders to "make appropriate adjustments" to their approach.

Here is today's quiz. If you were given $1,000,000 to spend each day, how many days would it take you to spend $12.2 trillion dollars? You are probably wondering where the number $12.2 trillion came from? Well, this is the amount of money the government has committed for economic recovery.

Some of the monies can be accounted for but its still a big mystery where the rest went. So far we know this:

In celebration of Barry Ritholtz's critically-acclaimed new book Bailout Nation, he held The Big Picture Conference, which I was fortunate to attend.

Here are the main points from the most reputable speakers, Congressman Alan Grayson, Nassim Taleb, Doug Kass, and Josh Rosner.

Florida Congressman Alan Grayson discussed how systemic risk is an excuse for socialism and that interconnectedness is the main reason that these institutions are "too big to fail." In fact, these institutions no longer hold social or economic purpose, they are simply too big to exist.

Did you hear? Mortgage rates are surging. That should be no surprise. All we had to do was look at the sharp sell off in US treasuries and you know that mortgage rates would follow suit. The 30 year fixed rate mortgage rate jumped to 5.29%, up from 4.91% just a week ago. On April 2nd the rate was 4.78%.

Just to give you an example in real dollar terms, let's take a $200,000 30 year fixed mortgage at 5.29%. Your monthly payment would be $1109.37 and your 30 payments would be $399,372.25. At 4.91% your monthly payment would be 1062.67 and your 30 payments would be $382,560. So in real dollar terms your cost has risen $16,812.00. In addition lenders are charging 0.7% in fees and points, unchanged from the previous week.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abercrombie & Fitch Co. (NYSE: ANF) reported dismal Q1 numbers as same-store sales plunged.
• Applied Materials Inc. (NASDAQ: AMAT) dismal Q2 results were in line with analysts' expectations.
• Bankrate Inc. (NASDAQ: RATE) reported lower earnings and revenue for Q1 and offered no guidance.
• Blockbuster Inc. (NYSE: BBI) earnings, revenue, and same-store sales all fell in the first quarter.
• Dr Pepper Snapple Group (NYSE: DPS) Q1 earnings declined but still topped analysts' expectations.

Late Tuesday, Freddie Mac (NYSE: FRE) reported that its quarterly net loss checked in at $9.9 billion thanks to rising delinquencies. The company also blamed the results on continued impairments on its holdings of mortgage-backed securities. On a per share basis, FRE's quarterly loss increased to $3.14 a share, compared to $151 million a year ago, or 66 cents a share. The mortgage lender's total revenue dropped to $771 million from $1.41 billion a year ago.

FRE put aside $8.8 billion in provisions in order to cover credit losses for the first quarter, up from $7 billion in the final quarter of 2008. FRE attributed this to the increase in the number and rate of delinquent mortgages, coupled with increasing foreclosure-related losses.

Back to the trenchant trenches. More bad housing news came out of California. The loan default rate spiked 80% in the first quarter, according to DataQuick. This is a precursor to a HUGE spike in foreclosures (defaults are the first step down this road) and a strong indicator that the real estate market in California still has another leg down. Even wealthy spots like Santa Clara and Contra Costa counties are showing mid-double digit increases in default notifications.

Despite the market being up the last hour, today's stock market made six changes between being up and down. Oil inventories continued their building to record or near-record levels. It was very light on the economic calendar today so traders had to use the cumulative earnings as the directional report. Even very weak global recovery targets from the IMF were ignored.

Here are today's unofficial closing bell levels:

Dow 7,886.41 -83.15 (-1.04%)
S&P 500 843.56 -6.52 (-0.77%)
Nasdaq 1,645.85 +2.00 (0.12%)

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It's times like this that all of the vitriol spewed at heads of companies seems a bit overdone. Reportedly, Freddie Mac's (NYSE: FRE) acting Chief Financial Officer, David Kellermann, has been found dead in an apparent suicide.

According to reports, Kellermann's wife found his body and alerted the authorities early this morning. While the police have yet to confirm suicide, most outlets covering the report are saying it was. And while Bloomberg is reporting the death was "unintended," it's been reported that Kellermann's wife told police it was a suicide.