Debt from Fannie Mae and Freddie Mac shouldn’t be considered sovereign debt, but there should be no doubt about the U.S. government’s support for the two firms, Treasury Secretary Timothy Geithner said in a recent letter to a U.S. House lawmaker.
Geithner, responding to a letter from to Rep. Scott Garrett (R., N.J.), said debt from the two government-sponsored enterprises isn’t the same as U.S. Treasurys, but that support for the two firms “is crucial in helping to stabilize the housing market and the overall economy. The Treasury’s actions regarding the two firms, which have been under government control since September 2008, “should leave no uncertainty about Treasury’s commitment to support Fannie Mae and Freddie Mac,” Geithner wrote.
“The Administration will take care not to pursue policies or reforms in a way that would threaten to disrupt the function or liquidity of these securities or the ability of the GSEs to honor their obligations,” Geithner wrote.
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