(FORTUNE Magazine) – Your company's earnings set records every year. Its stock price has been climbing steeply for a decade. It's the undisputed leader of an industry Congress has effectively closed to all but one reasonably friendly competitor. And it enjoys billions in government largess. In all, you've got a great deal going. You'd be nuts to give it up.

This sums up the circumstances of Fannie Mae, America's richest corporation (it passed Citicorp in assets three years ago). But in a world rife with greed, envy, and people who believe in free markets, it should be no surprise there are those who begrudge the mortgage giant its privileged status. Wall Street executives grumble that the government perks enjoyed by Fannie and little brother Freddie Mac (15th in U.S. assets) make it almost impossible to compete with them in the business of turning home loans into tradable securities. Washington bureaucrats and political hacks mumble about the multimillion-dollar salaries paid to the companies' executives, many of them former bureaucrats and political hacks themselves. And economists shout from the hilltops that the basic premise behind Fannie's and Freddie's success, that there is in fact a free lunch, just can't be right.

The chorus of critics has grown louder with the release this spring of a string of reports on these government-agencies-turned-profit-machines. The Congressional Budget Office argues in one that just two-thirds of the benefits Congress bestows upon the companies, mainly the implicit guarantee of their securities, get passed on to consumers. Another study claims that the mortgage market would function just fine if Fannie and Freddie gave up their perks. A House subcommittee will look into the reports this month, and more studies and hearings are on the way.

As is natural for people with billions of dollars at stake, the two companies are hitting back with every argument they can think of. Even contradictory ones: Fannie contends that it and Freddie have no "market power"; that is, they can't impose prices on consumers. Nevertheless, whenever anyone proposes levying fees on the two companies, they claim every cent will be passed on to homebuyers--the very definition of market power. Leland Brendsel, Freddie's CEO, told a Senate panel in March that his company poses "no risk to taxpayers," but Freddie and Fannie dominate housing finance mainly because the people who buy their securities believe that Congress will step in if things go wrong.

Every debt security the companies issue does warn in bold type that it is "not guaranteed by the United States." Luckily for Fannie and Freddie, no one believes it, which is why the interest they pay investors is only slightly higher than what the Treasury pays, and averages half a point less than what other financial companies pay. Thus, in the one area where Congress allows Fannie and Freddie to do business (buying home mortgages of $207,000 or less), they're dominant.

This market power is fairly new. Congress launched both institutions as backup providers of mortgage funds, but when the S&L industry collapsed in the late 1980s, the pair seized the moment and took over the business. By most accounts, they've done a good job. Homebuyers usually pay a third of a point less on the mortgages Fannie and Freddie can purchase than on the jumbo loans they can't; regional mortgage credit crunches are a thing of the past.

The catch is this: The implicit guarantee, plus exemption from state and local income taxes and from SEC registration, is worth more than $6 billion a year, according to the CBO. Somebody is paying, and it's not Fannie or Freddie.

These costs may be painfully evident to economists, but they're not obvious to the taxpaying public. The benefits that Fannie and Freddie provide, however, are tangible--one reason Congress won't wean them from federal nourishment in the near future. Also, since the government guarantee that skews the markets in favor of Fannie and Freddie doesn't officially exist, just passing a law may not kill it. A smaller step--like requiring the companies to hold more capital--is almost sure to be squelched by Fannie, whose lobbying prowess has achieved near-mythic status.

A likelier scenario is that Fannie and Freddie will find ways to extend their reach. When you're big and rich, and Congress is your friend, critics, schmitics: The sky's the limit.

--Justin Fox