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Dodd and Sen. Charles E. Schumer (D-N.Y.), chairman of Congress' Joint Economic Committee, offered reassurances.
"Fannie and Freddie are too important to fail. Their fundamentals, as they look now, provide no reason to think they will fail," Schumer said on the Senate floor. "These two institutions are the foundation of the American mortgage market, and we stand fully behind them and their crucial role."
"The facts are that these are sound, solid institutions with more than necessary capital today that the law would require," Dodd said.
These two gigantic hedge funds intentionally manipulated their accounting to show a capital position that was stronger than reality, by pushing forward losses instead of recognizing them as they occurred.
While not illegal, it had the effect of lying to the markets, which put both firms at risk of all-on collapse.