Treasury: U.S. 'Effectively Guarantees' GSEs

In effort to reduce mortgage rates, the Treasury Department is stressing that the U.S. government "effectively guarantees" all Fannie Mae and Freddie Mac debt and mortgage-backed securities. "The U.S government stands behind these enterprises, their debt and the mortgage-backed securities," Treasury acting under secretary Anthony Ryan told the Securities Industry and Financial Markets Association. "Their mission is critical to the housing markets in the United States and no one will deny the importance of these institutions in assisting our housing market in this downturn," Mr. Ryan said. The two government-sponsored enterprises were placed into government-controlled conservatorship on Sept. 7. Fannie Mae and Freddie Mac each entered into a preferred stock purchase agreement with Treasury "that effectively guarantees all debt issued by the GSEs, both existing and to be issued," the Treasury official said.