Question about (FNM) fannie mae?

"Fannie Mae to sell $2 bln in bills on Wednesday", what does this accomplish for them? Thanks.

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  • Anonymous
    1 decade ago
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    It means that Fannie Mae will have $2 billion more to buy mortgage backed securities from US banks.

    Fannie Mae borrows from investors at lower interest rates by selling them bond securities and then uses the money to buy mortgage backed securities that pay higher interest rates. And the risk for Fannie Mae (and the US government which controls Fannie Mae) is that many homeowners might default, which would decrease the value of the mortgage backed securities.

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