Chinese Government is Top: "A bailout of GSE bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics."
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perhaps the greatest taxpayer rip-off in American history. It is bad
economics and you can be sure it is terrible politics."
Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac
Bonds
$376 Billion in Chinese Agency Bond Holdings Subject to Taxpayer
Bailout Proposals According to FreedomWorks Analysts
http://www.marketwatch.com/news/story/chinese-government-top-foreign-holder/story.aspx?guid=%7B347DF7BF-F0B7-48C9-A418-5A0B903D9F72%7D&dist=hppr
WASHINGTON, Jul 11, 2008 (BUSINESS WIRE) -- As politicians call for
taxpayer bailouts and a government takeover of troubled mortgage
lenders Freddie Mac and Fannie Mae, FreedomWorks would like to point
out that a bailout is a transfer of possibly hundreds of billions of
U.S. tax dollars to sophisticated investors and governments overseas.
The top five foreign holders of Freddie and Fannie long-term debt are
China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total
foreign investors hold over $1.3 trillion in these agency bonds,
according to the U.S. Treasury's most recent "Report on Foreign
Portfolio Holdings of U.S. Securities."
FreedomWorks President Matt Kibbe commented, "The prospectus for every
GSE bond clearly states that it is not backed by the United States
government. That's why investors holding agency bonds already receive
a significant risk premium over Treasuries."
"A bailout at this stage would be the worst possible outcome for
American taxpayers and mortgage holders, who have been paying a risk
premium to these foreign investors. It would change the rules of the
game retroactively and would directly subsidize the risks taken by
sophisticated foreign investors."
"A bailout of GSE bondholders would be perhaps the greatest taxpayer
rip-off in American history. It is bad economics and you can be sure
it is terrible politics."