Fannie and Freddie have been bad. Their accounting has been a mess. Executive management has come in for severe criticism in the past couple years.

Now Merrill Lynch is pointing a nervous finger at regulators who they fear are going to take action to clean up the act at Fannie and Freddie.

As you know I have been quite negative on these companies and stocks for some time. I will be watching for more Wall Street downgrades in the next month.

But, really, what does it matter. These stocks have gone nowhere since the end of the secular bull in financial assets in 2000, which has been followed by a secular bull in commodities. And they will go nowhere until the commodity bull has been beaten or held in check and a new bull starts in financial assets.