Frank causes stir in mortgage markets
The powerful chairman of the House Financial Services Committee caused a stir in the mortgage-backed securities market on Friday by suggesting that Fannie Mae and Freddie Mac bondholders do not have the same guarantees as Treasury bondholders.
Rep. Barney Frank, a Massachusetts Democrat, told reporters that bondholders of major mortgage finance sources Fannie Mae (FNM.N) and Freddie Mac (FRE.N) should not assume the federal government will guarantee the debt of these government-sponsored enterprises at 100 cents on the dollar and they could theoretically suffer losses, according to U.S. media reports.