Bond salesmen, peddling trillions of dollars of Fannie Mae and Freddie Mac fixed-income securities to investors all over the world, said something like this: "You can't go wrong buying this, because it is really a U.S. government credit, but it pays you a higher yield! So you get more profit with no credit risk."

What the bond salesmen told the global investors was true, as events have fully confirmed. The Treasury Department's financial support of Fannie and Freddie is unlimited. The largest owner of their obligations is now the Federal Reserve.

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