Both Republican and Democratic members of Congress agree that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) may need a taxpayer-funded bailout. Amounts of the bailout have ranged as high as $25 billion.

While this is a whopping big bucket of money, it pales in comparison to the $217 billion worth of non-agency securities that have fallen in value and the $1.5 trillion in debt downgrades in 2Q alone. In order to mitigate objections from taxpayers opposed to using public monies to bail out a quasi-private industry, those bulwarks of fiscal responsibility in Congress are beginning to draw up plans to curb executive compensation for those who will help Fannie and Freddie crawl out of the hole.

In 2007, Fannie Mae President Daniel Mudd earned a $2.2 million bonus on top of his $10 million salary. Members of Congress want to know why the executives who ran the ship aground were rewarded handsomely for doing so. Some members of Congress have suggested that previous executive bonuses should be given back to the companies. I bet some taxpayers might want to apply this same reasoning to Congressional salaries and perks.

Hedge funds and speculators reduced positions in oil by 80% as prices rose to records and as U.S. regulators started investigating trading, Bloomberg News reported Monday, citing government data.

Net long positions decline to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27, 2008 from a record 127,491 contracts on July 31, 2008 according to a U.S. Commodity Futures Trading Commission report.

Last week, the CFTC, under pressure from Congress, announced that it had expanded an investigation of oil's price rise and oil futures contracts. Oil has increased about 100% in the past 12 months, and about 480% since 2002. Oil rose $1.50 to $128.50 per barrel in mid-day Monday trading.

Durable good orders jumped 5.2% in December 2007, well above the 1.6% consensus estimate. The U.S. Congress and the Bush Administration are progressing full-speed-ahead, albeit with some Senate tweaking, toward a $150 billion fiscal stimulus package that will, at minimum, provide a modest boost in GDP. Meanwhile, the Dow Jones Industrial Average, as the late financial talk show host and journalist Louis Rukeyser would say, amid all of the financial world's tumult and write-downs and restatements and remonstrations, has dropped... less than 15%.

With the above as backdrop, is this a time for the U.S. Federal Reserve to deviate or perhaps pause from its monetary policy easing path on the thesis that maybe there's enough stimuli in the system?

"Not on your life," economist David H. Wang said Tuesday. "The Fed's 'clear and present' danger threshold has been met and we're going to need an accommodative monetary policy for awhile." Wang argued that four factors will continue to act as contractionary affects on the U.S. economy for at least the next 6-9 months: more mortgage/MBS defaults, a renewed recognition of risk by investors, tepid job growth, and that nemesis of free world economic growth: high energy prices (primarily oil).

What will the market's reaction be to the mid-term elections that are hopefully flourishing all across the country today? Well, if the U.S. Congress is any measure -- and it is -- the possible change in leadership from the 'Pubs to the 'Crats could cause some market whining and could send a minor -- or major -- spook into the marketplace this week. And we all thought Halloween was over by now.

A Republican leadership is generally more business-friendly in terms of policymaking than a Democratically-controlled Congress, and that fear alone could cause a sell-off or other strange and potentially harsh effects tomorrow and the rest of the month once the results start pouring in tonight after the market closes.

I am a huge fan of regularly changing the majority party in control of the U.S. Congress since it keeps business leaders on their toes and thwarts complacency and glad-handing. "Stirring the pot" is healthy for the economy and business in general in the world's largest economy, and we may see that happen today if the Democrats seize control of the House of Representatives. The Senate also up for grabs; it would take six seats changing hands for the Democratic party to stake its claim there as well. If that happened, President Bush would be in a quagmire for the rest of his administration.

What's your take? Will the election results today keep the market's status quo intact -- and growing -- or will possible majority changes cause strife in the White House and the two houses of Congress? Story at about 11:00 -- or shortly thereafter.