Bond Market Concerns Could Scuttle Paulson’s Fannie-Freddie Plan
- Investors blanch at prospect of limiting government backstop
- Key official says administration wants explicit guarantee
Fannie Mae-Freddie Mac Plan Worries Bond Investors
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A hedge fund proposal for freeing Fannie Mae and Freddie Mac from U.S. control is poised to face stiff opposition from investors who say it risks wrecking the mortgage-bond market.
The Moelis & Co. blueprint, which firms including Paulson & Co. and Blackstone Group LP sponsored, calls for raising tens of billions of dollars in capital for the mortgage-finance companies. The plan, released earlier this month, would also limit the amount of federal money available to offset any Fannie and Freddie losses to $150 billion.