Tags: China | US | Honor | Fannie | Freddie | Obligations

China: US Will Honor Fannie, Freddie Obligations

Monday, 14 Feb 2011 09:02 AM

China, a large holder of debt from mortgage holders Fannie Mae and Freddie Mac, is confident Washington will stand behind the obligations of the mortgage giants even as it phases the institutions out, the Wall Street Journal reports

Most of China's $2.85 trillion reserves are invested in dollar assets, and while Beijing doesn't disclose the size of its holdings of Fannie and Freddie securities, some past records show the country owns hundreds of billions of dollars of debt from them and other U.S. agencies.‬‬

105928234.jpg
Freddie Mac headquarters in McLean, Va.
The Obama administration has said it would cut its involvement in the two companies, which were taken over in 2008, although the White House has said it "will not waver from its commitment" to ensuring that the two "have sufficient capital to honor any guarantees issued now or in the future and meet any of their debt obligations."‬

China's State Administration of Foreign Exchange, the arm of China's central bank that manages foreign-exchange reserves, says that while the White House plan "has aroused widespread public interest and concern that our foreign-exchange reserve investments could be damaged," the Chinese government "took particular notice that the U.S. government's commitment to support [Fannie and Freddie] hasn't changed."‬

Analysts recognize the need for Washington to honor Freddie and Fannie obligations.

"One of the issues is that a lot foreign central banks have put money into Fannie and Freddie debt that allows them to operate, and you have to be very careful in fixing these institutions because they do have foreign central bank ownership," says Chris Rupkey, chief financial economist, Bank of Tokyo-Mitsubishi in New York.

"They have to tread cautiously, otherwise somebody else is going to have to fund them," he told Reuters.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
StreetTalk
China, a large holder of debt from mortgage holders Fannie Mae and Freddie Mac, is confident Washington will stand behind the obligations of the mortgage giants even as it phases the institutions out, the Wall Street Journal reports Most of China's $2.85 trillion reserves...
China,US,Honor,Fannie,Freddie,Obligations
289
2011-02-14
Monday, 14 Feb 2011 09:02 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved