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The Chinese and Japanese governments own billions of dollars in Fannie, Freddie debt.
The investors who backed the companies' expansion shoulder some of the blame too. Bondholders, including institutional investors and foreign central banks, bought billions of dollars of their debt in recent decades. Central banks in Japan and China held some $600 billion of U.S. agency paper as of June 2007, according to the latest Treasury data.

Fears that these investors would dump Fannie and Freddie bonds forced the Treasury to propose its rescue plan Sunday - sending as strong signal to these investors that a default isn't on the horizon. "The debt holders and the U.S. government are the true economic owners" of Fannie and Freddie, writes Chris Whalen at the Institutional Risk Analyst. Accordingly, bondholders are likely to end up controlling the equity of the company in the event of any restructuring.

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Last updated July 18 2008: 4:35 PM ET
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