Fannie Mae and Freddie Mac (F&F) are publicly traded government-sponsored enterprises (GSEs) that operate with unique Congressional charters.  In order to fulfil their public mandate F&F engage in two principal activities: 1) “mortgage securitization business” (that is an off-balance sheet operation): converting lenders’ conforming mortgages into tradable mortgage-backed securities (MBS) and guaranteeing the timely payment of interest and principal against a periodical guarantee fee; 2) “investment portfolio business” (on-balance sheet business): issuing AAA rated agency debt in order to re-purchase MBS and/or whole mortgages in the secondary market for F&F’s own retained mortgage portfolios. Overall, F&F create about two-thirds of all MBS and the total stock of mortgages guaranteed by F&F (on- and off-balance sheet) totaled about $3.7 trillion at year-end 2004. In comparison: all U.S. Treasury debt outstanding was $4.4 trillion at year-end 2004.