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Despite an unclear future for Freddie Mac and Fannie Mae, China has raised its holdings of their institutional debts, by 5.59 billion U.S. dollars. Many see the move as an indication of China's confidence in the U.S. economy.
The decision is the latest in China's efforts to diversify its foreign reserve portfolio. There is widespread concerns that Fannie Mae and Freddie Mac are in bad shape, with both lenders reporting huge losses in the second quarter.
- Background of Freddie Mae and Fannie Mac 2010-07-09