Administration officials Thursday downplayed a proposal to deposit Fannie Mae and Freddie Mac’s multi-billion-dollar toxic loans into a “bad bank” structure, saying it was one of more than a half-dozen plans being discussed for the mortgage giants. The news was quickly followed by reports that Fannie was increasingly insolvent, losing an additional $14.8 billion last quarter, which forced it Thursday to ask the Treasury for $10.7 billion more of funding. DS News reported earlier this week that President Barack Obama’s National Economic Council would soon consider

the proposal, along with several other options for Fannie and Freddie that include total liquidation and full nationalization. “The facts are that no proposal has been taken up by the NEC and no meeting has been held to discuss specific reform options,” spokeswoman Jennifer Psaki told the Washington Post. “The notion that any specific option such as good bank, bad bank has gained any momentum is erroneous.” Speculation on the idea — which would strip off the worst-performing assets of Fannie and Freddie, who were left holding billions in devalued mortgage-backed-securities when the housing bubble burst — was further fueled when outgoing Federal Finance Housing Agency Director James B. Lockhart told a Post interviewer that he hoped to see a “good bank, bad bank” structure for the government-sponsored mortgage firms in the future. But White House officials adamantly denied that the president’s advisers had even considered the plan yet. “The story out today is light years ahead of any decision-making process here,” White House Press Secretary Robert Gibbs said, quipping that “many senior administration economic officials learned of this proposal sometime this morning at the foot of their driveway.”