????Almost three years after Hank Paulson first brandished his bazooka, the sight of Fannie and Freddie debt is still giving people the yips.

????The government unveiled a plan Friday that it said will result in the eventual wind-down of the government-backed mortgage companies. Officials stressed that the process will take years, and Treasury Secretary Tim Geithner went out of his way to say the administration will in the meantime stand behind Fannie and Freddie's obligations.

????"We will make sure these institutions have the resources they need to meet their commitments," Geithner said. "The world understands we will stand behind so these institutions can meet their commitments."

????But contrary to what Geithner says, there are signs the world isn't totally at ease with the companies at a time U.S. finances are stretched and Fannie and Freddie are being cast by many Republicans as public economic enemy No. 1.

????Commentators are wondering again, as they were before Paulson took over the companies in September 2008, whether China – the biggest single foreign holder of the $7 trillion or so in outstanding agency debt – will unnerve the market by starting to sell the companies' bonds.

????So far the answer is no. But even if the world believes the Obama administration stands firmly behind the companies, there is the question of whether that might change if a new administration takes office in January 2013. And even if nothing changes then, as is likely, the cost of backing the companies is only going to mount.

????Together, those factors make administration support for Fannie and Freddie an "empty check," according to a report issued this week by a prominent economist at a major Chinese bank.

????"Looking at the current political situation in the U.S., for the U.S. Congress to give a clear guarantee on this issue is almost impossible," said Lu Zhengwei, a senior economist at China's Industrial Bank Co., Dow Jones reported.

????Separately, China's government on Friday denied a Chinese news report that it could face losses on its holdings of Fannie and Freddie securities. China is believed to hold around $500 billion or so of the companies' bonds.

????China is surely right that there is next to no default risk on the GSE debt. Were the U.S. to yank the rug out from under Fannie and Freddie, it would almost certainly precipitate a major fiscal crisis here – something even the looniest hawks in Congress might stop short of.

????But Lu questions whether China would benefit by selling more of its GSE debt now, while the Fed is propping up all debt markets by buying Treasury securities. He reasons the prices on all bonds should fall after the Fed ends QE2 in June, which could give China an incentive to move quickly.

????If this sounds familiar, it should. Fear that China would dump the bonds led Paulson in 2008 to make his famous claim on Capitol Hill that a congressionally approved credit line to support the companies would keep investors from fleeing the market in the companies' debt.

????"If you have a bazooka in your pocket and people know it, you probably won't have to use it,'' he said at a July 2008 Senate Banking Committee hearing. The rest is history, $153 billion worth and counting.