Geithner: Fannie, Freddie debt is not U.S. sovereign debt

Treasury Secretary Timothy Geithner said debt issued by Fannie Mae and Freddie Mac should not be considered to have the same backing as the U.S. government's own sovereign debt.

But Geithner, in a letter to Rep. Scott Garrett (R-N.J.), reaffirmed this week the administration is committed to supporting the two housing finance giants that are in government conservatorship and would provide them necessary capital to meet their obligations. 

Geithner said that support to Fannie and Freddie, "does not change the legal status," of the two government-sponsored enterprises' debt.

"The corporate debt of the GSEs is not the same as U.S. Treasuries, nor should it be considered sovereign debt," Geithner wrote.

Geithner said the debt should not be counted towards the overall government's debt ceiling, which has been raised several times to account for new spending to stimulate the economy and limit the effects of the recession.

Republicans are pushing the administration to count the Fannie and Freddie money as part of the total debt.

"It seems obvious to me that Congress and the financial markets should consider the combined $1.6 trillion of debt issued by Fannie Mae and Freddie Mac as backed by the full faith and credit of the United States," Garrett and Rep. Spencer Bachus (R-Ala.) wrote.