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The worst that can happen is a drop in the value of the dollar versus other currencies.

No that is not the worst that can happen by a long shot. Whether the worst that can happen will is another issue, but right now a lot of folks think that they are worth a lot of money based on liquidity in real estate pumped in by these mortgage institutions.

About folks thinking they are rich because of "their" houses, well, so what. Either the price of houses in dollars will go down or inflation will have the same effect, or perhaps taxes, or even something else will do the job, and sooner rather than later. As far as a lot of people getting "poor" who aren't expecting such things ("The horror! The Horror!" Heh, heh), well, tough. Can't be stopped.

Or, something else will happen. Who knows what. Endless scenarios can be drawn. How about this one - British epidemiologists figure that the Black Death was not bubonic plague, but instead a virus, more related to influenza than to flea bites. Or perhaps you prefer the current anxiety over oil supplies.

My point is that a collapse of Fannie and Freddie is quite small potatoes. The Dems would figure that their time to become the American National Socialist Worker's Party (heh, heh) has finally come, of course.