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Obama budget keeps Fannie/Freddie at arm's length

WASHINGTON, May 7 (Reuters) - President Barack Obama's budget proposal for 2010 tallies up the federal aid granted to Fannie Mae FNM.N and Freddie Mac FRE.N but does not bring those mortgage-finance companies' obligations fully onto federal books.

“They are not included in the Federal Budget because they are private companies, and their securities are not backed by the full faith and credit of the Federal Government,” according to budget documents released on Thursday.

In September, Fannie Mae and Freddie Mac were effectively nationalized when the government promised to by up to $100 billion preferred shares in each company and created warrants to severely dilute existing shareholders. (By Patrick Rucker; Editing by Neil Stempleman)

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