The federal government Tuesday holds its first major forum on what to do about Fannie Mae and Freddie Mac, which hold $5 trillion in mortgage debt.

Treasury officials hope to develop a plan to reform the housing finance giants and present it by January. In addition to housing industry experts, the Conference on the Future of Housing Finance is attracting bankers, investors and policymakers searching for ways to fix the government-sponsored entities that have been bailed out to the tune of $150 billion since September 2008, CNN Money said.

The Federal National Mortgage Association, known as Fannie Mae, last week asked the U.S. Treasury Department for $1.5 billion more, even though it reported its finances were improving.

Fannie Mae lost $1.2 billion in the second quarter and paid out $1.9 billion in dividends to the Treasury. The giant mortgage broker, which owes the government $84.6 billion, lost a whopping $11.5 billion in the first quarter and said in a statement it "does not expect to earn profits in excess of its annual dividend obligation to Treasury for the indefinite future."

Fannie Mae and Freddie Mac, the Federal Home Loan Mortgage Corp., fell into federal conservatorship after suffering huge losses when the housing bubble burst two years ago.

Although government-sponsored they are private companies that purchase bundled mortgage securities that in effect set parameters for acceptable mortgages in the $12 trillion U.S. mortgage market.

Affordable housing advocates call for more government support for Fannie and Freddie for rental housing while Republicans have proposed shutting down both firms, The Washington Post said.

"What I'm afraid of is that people on either side of the aisle will potentially play politics and point fingers," Michael Berman, new chairman of the Mortgage Bankers Association told the Post last week. "There's some folks that are so afraid of having any government involvement at all because of all the losses we've had."

Treasury Secretary Tim Geithner has said he thinks there's a "strong economic and public policy case" for keeping government guaranteed mortgage lending.

The Federal Reserve Monday said it was adopting new rules, effective in April 2011, banning yield spread premiums, which allowed mortgage brokers and lenders to charge borrowers higher-than-market interest rates.

Such practices helped fuel the sub-prime housing financing boom before the market collapse, The New York Times said.

"People didn't just happen to end up in risky loans," Michael Calhoun, president of the center for Responsible Lending," told the Times. "Mortgage brokers and other people on the front lines were getting two to three times as much money to push buyers into those loans than they were into 30-year fixed-rate loans, so what do you think happened?

In international markets Tuesday, the Nikkei 225 index in Japan fell 0.01 percent while the Shanghai composite index gained 0.38 percent. The Hang Seng index in Hong Kong gained 0.12 percent while the Sensex in India lost 0.01.

In Australia, the S&P/ASX 200 index rose 0.87.

In Midday trading in Europe, the FTSE 100 index in London rose 0.88 while the DAX 30 in Germany rose 1.12 percent. The CAC 40 in France rose 1.20 percent and the pan-European DJ Stoxx 50 rose 0.27 percent.