If the idea of the government essentially bidding on its own contracts sounds sort of odd to you, you should note that Fannie Mae (FNM) and Freddie Mac (FRE) have each put in bids to manage both mortgage securities and whole loans under the Treasury’s Troubled Asset Resolution Program. Confirmation of the bidding process comes from Federal Housing Finance Agency director James Lockhart, who told Reuters in an interview at the Mortgage Banker’s Association’s annual conference in San Francisco that both GSEs were bidding for business from the U.S. Treasury. “They … have some skills in this area,” he told the news agency. “Whether it is contacts with the banks that hold these loans. Whether it is servicing or whatever.” “I don’t think (this) is expanding their mission. I think it’s just about using their current facilities,” he told Reuters. A few of HW’s sources were angry at the idea that the government would step in and potentially take contracts away from private-market participants should they award any TARP contracts to either Fannie or Freddie — while neither GSE has been nationalized by an act of Congress, both were placed into federal conservatorship by the Treasury earlier this year, with the U.S. Treasury taking a preferred equity stake in both companies. “Paulson has already proven his penchant for saying one thing and doing another when it comes to the GSEs,” said the source, a hedge fund manager that asked not to be identified in this story. “If they’re actually going to award anything out of TARP to Fannie and Freddie, it makes no sense for them to ever have asked other firms to put in bids. Just give all of it to the government.” Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.