NY Times article about Fannie and Freddie
The NYT did a great article about foreign participation of Fannie Mae and Freddie Mac mortgage-backed bonds on July 21st.
The article quantifies the involvement of foreign investors in buying mortgage-backed bonds (which helps keep bond yields/ interest rates low). The article suggests that in the past few years Fannie Mae and Freddie Mac officials were “selling” mortgage-backed bonds as investments to foreigners by describing them as securities which were implicitly backed by the US Government even though the US has no legal obligation to bail Fannie Mae and Freddie Mac out. However, based on Henry Paulson’s recent comments it looks likes this may actually be the case.