Takeover of Fannie, Freddie Boosts Israeli Banks

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CBNNews.com - JERUSALEM, Israel - The U.S. government takeover of mortgage giants Fannie Mae and Freddie Mac was welcomed by Israeli banks.

"The nationalization of Freddie Mac and Fannie Mae is good for the local banks," said banking analyst Alon Glazer.

"The [Israeli] banks that today hold bonds of Freddie Mac and Fannie Mae are Israel Discount Bank, Bank Leumi and First International Bank.

As far as they are concerned, the nationalization is a positive step because now the bonds are those of the U.S. government -- and the price can only go up," he said.

According to the Israeli daily Haaretz, Bank Discount holds a 9 billion shekel (approximately $2.5 billion) in U.S. mortgage-backed securities and Bank Leumi a 3.4 billion shekel (about $1 billion) investment.

"The local banks' holdings, as far as we know, are in MBS [Mortage-Backed Securities] financial instruments. These products will benefit from the nationalization since they become government protected," Glazer said.

Source: Haaretz

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