WASHINGTON - Bert Ely, a banking analyst, predicts that the debate over Fannie Mae and Freddie Mac's regulatory future will cause spreads on agency debt to widen until they are "closer to" corporate bond spreads.

Treasury and Federal Reserve officials in recent months have publicly advocated reconsidering Fannie Mae and Freddie Mac's implied government guarantee. And at an American Enterprise Institute forum Tuesday Rep. Richard Baker, R-La., warned investors in agency securities to "beware" of the political momentum he has generated. Rep. Baker is sponsoring a bill that would tighten regulation of the government-sponsored enterprises.

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