Fannie Mae Closes Big Bond Sale Despite Political Pressure

Fannie Mae, the nation’s biggest mortgage buyer, made history with an $11.5 billion bond sale Wednesday. It was the largest dollar-denominated, one-day bond sale ever in the US outside of the Treasury market. (In June, Deutsch Telekom did $14 billion, including 9.5 billion in US$ and $4.5 billion in other currencies.)

The sale suggests not only that the bond markets are healthy again, but also that the quasi-government agency is succeeding in its efforts to become a benchmark security in those markets.

This sale was made despite increasing scrutiny from politicians and banks that say the government-sponsored Fannie Mae and Freddie Mac have advantages that let them unfairly compete with private businesses. Other critics say the growth of these agencies could put their investors at risk, and call for new limits on them. Rep. Richard Baker, a Louisiana Republican, introduced a bill that would give Fannie Mae a new regulator and prevent it from borrowing directly from the Treasury, a move that would weaken Fannie’s credit quality in the bond markets.