WASHINGTON — Treasury Secretary Henry Paulson's bet that expanded power to backstop Fannie Mae and Freddie Mac would calm the markets appears to have been misplaced.

The situation for both government-sponsored enterprises is now worse than it was when Mr. Paulson sought and received emergency authority in July, with both debt and equity markets rattled after investors demanded better terms than usual to buy Freddie's debt.

While speculation was rampant about what steps the government or private players might take next to address the GSEs' problems, observers agreed the Treasury's current policy of standing as a backstop without injecting money has fallen short.

"The arrangement that was put in place … is not meaningful," said Joseph Mason, a professor at Louisiana State University. "It didn't provide any real structural fix to the problems at hand, like the mortgage portfolios. So it's not surprising that we see ourselves back in the same place."

Jim Vogel, the head of fixed-income research at First Horizon National Corp.'s FTN Financial Capital Markets Corp., said that the situation is "going backwards" and that it is not clear what the government's goals are.

"That's the unknown," he said. "Once you outline what the Treasury really wants to accomplish and the priority list, then you can guess how they'll respond."

Both companies' shares were down nearly 30% at one point Wednesday afternoon. Fannie's stock closed down 27%, at $4.40, and Freddie fell 22%, to $3.25.

At least four options are on the table. The government may soon buy preferred stock in Freddie — rumors circulated Wednesday that the figure was at least $10 billion — exercising the new powers the Treasury was granted in the housing bill last month. Freddie is seen as in worse shape than Fannie because it has promised to raise $5.5 billion in capital but has not yet done so.

At the time, Mr. Paulson said that just giving Treasury the ability to buy unlimited amounts of GSE debt and equity would reassure the market, and that the new powers would very likely remain unused.

Exactly what happens if they are exercised is hard to say. At the very least, the Treasury is expected to demand management and other changes at the GSEs if they become a substantial stock or debt holder.

Though some observers said a Treasury bailout could be imminent for Freddie, the GSE would have to agree to the move first — and would help set its terms.

"It's going to be a negotiated agreement," said Joshua Rosner, a managing director at the research firm Graham Fisher & Co. Inc. "That's the thing markets are missing. When is Treasury going to step in? Treasury can't just step in."

The Federal Housing Finance Agency could put Freddie into receivership, effectively wiping out shareholders and nationalizing the enterprise. Nationalization would be far easier for the government than full-scale privatization, which would likely involve breaking Fannie and Freddie up into smaller companies. But nationalization presents its own challenges. Chief among them would be raising the national debt, which was already increased by $800 million last month to give the Treasury its new powers.

A third option could be an infusion of cash from a private-equity firm or other outside investor. Some sources said Freddie was actively seeking such a partnership, which it hoped would help it raise capital and reassure Wall Street. That is likely the best option for the government and the GSEs, but it was unclear if it could work. Investors are wary of investing in the GSEs if they fear more market uncertainty could undermine them and lead the government to take them over, wiping out their investment.

Finally, another idea under discussion was the possibility that Fannie and Freddie could seek catastrophic reinsurance — essentially a private market backstop that limits the losses they could take in a given year. But only a handful of insurance companies have the capability to assist Fannie and Freddie.

Officials at the Treasury, the FHFA and the GSEs were saying very little Wednesday. Sources said Freddie executives met with Treasury officials during the day to consider options. Such meetings have become routine, however, since the GSEs ran into trouble last month.

A Treasury spokeswoman would not say whether the administration is considering bailing out Fannie or Freddie. "We are monitoring the markets closely and focused on efforts that will promote market stability, mortgage availability, and protect the taxpayers," she said.

A spokeswoman from Freddie acknowledged the debt sale carried an interest rate of 113 basis points above Treasury securities, but she said the GSE was pleased with the result.

"We felt really good about yesterday because the distribution was really good," she said. "The fact that we could do a $3 billion deal in late August and were oversubscribed — we were very happy."

A spokeswoman for the FHFA said that "as of the second quarter, Freddie Mac continued to exceed minimum and FHFA-directed capital requirements."

A Fannie spokesman said the GSE remains well capitalized.

"We have undertaken a series of initiatives, including raising more than $7 billion in additional capital in the second quarter and bolstering our loss-mitigation efforts, to help us manage through this very difficult housing market," he said.

Debate over whether Fannie and Freddie might be nationalized has been pervasive in Washington since Congress gave Mr. Paulson expanded authority. But few agree on what is the best course of action.

The situation is more complicated as it occurs in a politically charged environment. With the Democratic and Republican conventions set to begin in the next two weeks, any move to bail out or take over the GSEs would draw significant attention, and could affect the presidential race.

"Unfortunately for everyone involved, it's not the best time to do any of this," Mr. Rosner said.

Observers are also closely watching whether the problems at Fannie and Freddie might spread to the Federal Home Loan banks. The 12 Home Loan banks filed second-quarter earnings reports last week, and each included virtually identical statements noting that the problems that prompted the Treasury to rescue Fannie and Freddie last month "increased the volatility in GSE debt pricing and funding."

"To the extent the FHLBanks' cost of funds increases, member institutions may, in turn, experience higher costs for advance borrowings," the Federal Home Loan Bank of Atlanta said in its statement.

Still, the Home Loan banks said in their quarterly statements that they are still able to fund their business through issuing debt.

"The FHLBanks were able to continue issuing short-term discount notes during this particularly stressful period," according to the Atlanta bank's report. "The FHLBanks continue to have access to all consolidated bond and discount note funding channels."

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