The prices of Fannie Mae's and Freddie Mac's stock rose 5% last week despite some unfavorable developments coming out of Washington.The Wall Street Journal reported Friday that the Bush administration has obtained a legal opinion from the Justice Department that affirms the Treasury Department's authority to limit the amount of debt the two government-sponsored enterprises can issue. Treasury officials announced several months ago that they were reviewing their authority to curb the debt issuance of the GSEs, but they appear to be very wary of exercising such control. Fannie's stock went up $1.32 per share on Friday and Freddie's rose $1.33 per share. Separately, the Department of Housing and Urban Development revealed that it has sent a letter to Fannie asking about the activities of its 55 partnership offices in the United States and its initiatives to assist foreign governments in developing secondary mortgage markets. Fannie's stock ended the week up 4.9%, at $73.12 per share, and Freddie's ended the week up 5%, at 67.24 per share. Fannie Mae is scheduled to release its second-quarter earnings on Wednesday.

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