Greenspan- Mortgage debt a threat to markets

Thursday, April 7, 2005

WASHINGTON -- Federal Reserve chairman Alan Greenspan urged Congress on Wednesday to restrict the multibillion-dollar holdings of the mortgage companies Fannie Mae and Freddie Mac, warning that their huge debt could imperil U.S. financial markets. His admonition lent support to an effort in Congress to tighten controls on the two government-sponsored companies following their accounting scandals. Even so, shares of the companies rose in trading Wednesday. The Fed chairman told the Senate Banking, Housing and Urban Affairs Committee that it might not be enough to just create a strong regulator for the companies, which hold or guarantee more than 45 percent of all mortgage loans in the country.

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