After hitting an intraday peak of 172 bps last November, spreads on 5-year FNMA debentures have collapsed to a mere 21 bps today. You couldn't ask for anything more normal than that. What this means is that investors around the globe have fully recovered their confidence in the ability of the U.S. government to support Freddie and Fannie. The subprime crisis has completely passed, according to this measure of financial health. Restoring confidence and stability to the Treasury and Agency market would for most observers be an essential precondition to the return of other markets, and the economy itself, to normalcy.
I don't mean this to be an endorsement of Freddie and Fannie, of course, and I have severely criticized them and the many subsidies that Congress has heaped on the housing market over the years. Government subsidies and meddling in the mortgage market are a big reason we had a housing crisis. But we are stuck with the problem, and for awhile the world wasn't sure we could handle the mess that Freddie and Fannie had become. Thanks to (very costly) taxpayer support we have effectively socialized the losses and can now move forward. Not the best of outcomes, of course, but it could have been worse.