The government’s bailout of mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) has Wall Street on a roll. After yesterday’s rally, US stock futures are pointing up again today.

For legendary investor Jim Rogers, however, the government’s intervention is “socialism for the rich.”

One big issue is the Treasury Department’s agreement to make secured loans to the companies if needed and even buy some mortgage-backed securities itself.

This from Jason Simpkins in Money Morning, writing about Rogers’ reaction to the bailout:

This is the biggest point of contention, as it puts taxpayer money at risk while at the same time boosting the value of Fannie and Freddie’s mortgage backed securities and bonds.

“This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents,” Rogers said. “I’m not quite sure why I or anybody else should be paying for this.”

Fannie and Freddie will broaden their operations to support the shaky housing market until 2010. At that point, however, the two will be forced to unwind their portfolios by 10% a year, until they reach $250 billion, to reduce the risk to the taxpayer.

Though, according to Rogers that plan could backfire as well.

“That’s going to also ensure that house prices continue to go down. It’s going to be harder and harder to get a mortgage,” Rogers told CNBC’s Squawk Box Europe.

Simpkins says Rogers is at odds with Berkshire Hathaway’s (NYSE:BRK.A, BRK.B) Warren Buffett :

Of course, the Oracle of Omaha sees things differently. He praised the plan as a wise move for Treasury Secretary Paulson, who Buffett said “did exactly the right thing.”

“I wouldn’t change anything in the plan myself,” Buffett said in his own interview with CNBC. “It’s the best deal and the most sensible deal available now.”

While he admitted the Treasury is officially “on the hook” for the depth of the housing downturn, Buffett argued that the government had no choice but to bail out Fannie and Freddie.

“Whatever they lose from this plan, if they hadn’t acted there were going to be greater losses down the road,” Buffett said. He also pointed out that the arrangement between the two insurers and the Federal government, from the point of inception, is truly to blame for current troubles and nothing can be done now to erase that.

“They got into this position many, many decades ago when they got into, sort of, half-slave, half-free position where they said, ‘We don’t guarantee Freddie and Fannie’s obligations,’ and wink-wink.

“You can argue that there should have been some different rules put in decades ago in terms of what these companies have done, and it wouldn’t have come to this,” Buffett went on, “but those rules weren’t put in by this administration, or this Congress or this Treasury Secretary, and they face the problem of, in effect, $5 trillion plus of a combination of portfolio and insurance out there, and, really, chaos in the housing and mortgage markets.”

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Read more on Freddie Mac, Fannie Mae, 2008 Financial Crisis at Wikinvest

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