With the Federal Reserve raising short-term interest rates by 50 basis points and Congressional testimony by the heads of Fannie Mae and Freddie Mac, a devastating blow to the mortgage market could have occurred this week. The market seemed to ignore the information, however, and behaved as it has over the past few weeks.

"The Gensler-Baker genie hasn't been totally put back in its bottle, but about half of that political risk has gone away," said Art Frank head of mortgage-backed securities research at Nomura Securities.

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