Fannie and Freddie: Toxic Toys vs. Toxic Paper

According to a Reuters report floating around, China is the largest foreign holder of Freddie Mac and Fannie Mae bonds. That’ll teach China to mess with the U.S. You may sell us toxic toys, but we’ll sell you toxic paper.

Somewhat more seriously, concerns about Fannie and Freddie’s bonds are overdone. Let’s keep that in mind. The equity is another story, but the bonds are not the problem, not yet anyway.