Although another congressional hearing on the government-sponsored enterprises took place last week (see story, page 2), markets reactions were generally positive. This marks a sharp contrast from the first hearing on the issue, which sent agency spreads to extreme wides.

"Agency spreads actually narrowed today and I think the hearings didn't seem to have much of an impact, but there were a couple committee members who said they didn't want to write up the bill this year, and that may have helped us tighten in a little bit," said Greg Rosenberg, a mortgage researcher for J.P. Morgan & Co.

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