(This guest post previously appeared at the author's site)

I have been asked some questions by members of the media and others about my noting the distinction between the legal situation of Fannie Mae and Freddie Mac debt and the debt of the U.S. Treasury.

Throughout the dispute through Fannie and Freddie in past years I have noted that Fannie and Freddie debt did not have the same legal standing like Treasury debt. This does not prevent the Treasury from treating the debt of Fannie and Freddie in the manner that it believes best supports the important goal of stabilizing the financial system. Specifically I support the intent of the Treasury to stand fully behind the terms of its December 24 statement with regard to Fannie and Freddie debt. It is also the case in going forward like we restructure housing finance we will make sure that there are no implicit guarantees hints suggestions or winks and nods. We will be definite about what is and is not an responsibility of the federal government.

To reiterate I continue to think that it would be a mistake for Congress to receive action that formally conferred on Fannie and Freddie debt the legal situation of debt issued by the Treasury. But nothing in that position prevents Treasury from acting as it thinks best with regard to its responsibility to supply stability to the housing market and the financial system.

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