The Demand For Fannie Mae Debt Drops

Reuters reports:

At roughly $7 trillion in size, which includes the subprime sector, the mortgage bond market is the world's largest, dominated by Fannie Mae and Freddie Mac.

"Liquidity in the agency MBS market is not only worse than it was a few months ago, it is worse than it was a just a few weeks ago," said Deutsche's Frank.

Issuance of bonds backed by non-agency debt has come to a virtual halt as investors refuse to buy securities backed by anything whose payments are not guaranteed.

No word yet from Congressman in Fannie Mae's pocket.