Links
Treasury restates support for Fannie, Freddie
The Treasury Department was forced Friday to reiterate its financial support for Fannie Mae and Freddie Mac after a key lawmaker rattled investors by pointing out that their debt does not enjoy the explicit guarantee of the federal government.
Speaking to reporters at a housing conference, Rep. Barney Frank, D-Mass., noted that debt issued by the two mortgage finance companies is different from bonds issued by the Treasury Department. He also raised the risk that investors in the companies' debt may not be paid back.
"I've always said to people, even when I was not too worried about Fannie and Freddie, please do not think this is federally guaranteed," Frank said. "I don't think it is, I don't think it should be."
To calm worried investors, Frank later issued a statement adding that this status does "not prevent the Treasury from treating the debt of Fannie and Freddie in the manner that it believes best supports the important goal of stabilizing the financial system."