Alan Zibel, THE ASSOCIATED PRESS

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WASHINGTON - Mortgage finance giant Fannie Mae shook up its executive ranks on Wednesday, after shares in it and sibling company Freddie Mac rose for a third straight day as investors appeared less certain a U.S. government bailout of the two troubled companies is imminent.

Fannie Mae, the largest buyer and backer of U.S. home mortgages, said its chief financial officer and two other top executives are leaving the company. Three current executives were promoted to replace them.

Fannie chairman Stephen Ashley said in a statement that board members remain "firmly committed" to chief executive Daniel Mudd.

Mudd was elevated to the top post in December 2004 when former CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal.

Fannie and Freddie saw their stock prices plummet last week as fears mounted they would soon need government support and that any bailout would leave stockholders in the lurch.

The government-sponsored companies hold or guarantee half the U.S. mortgage debt and are considered crucial to the mortgage market's continued operation.

But shares of both have climbed back in recent days, as analysts have cast doubt on whether any government rescue is truly inevitable.

Fannie shares rose 86 cents, or 15.3 per cent, to US$6.48 Wednesday, while Freddie advanced 78 cents, or 19.7 per cent, to $4.75.

Fannie Mae said CFO Stephen Swad, who joined the company last year from Internet company AOL LLC, is leaving to "pursue other opportunities" in the private equity business. He is being replaced by David Hisey, formerly Fannie's senior vice-president and controller.

Peter Niculescu, formerly head of the company's capital markets business, was named chief business officer, replacing the retiring Robert Levin.

Michael Shaw, formerly a senior vice-president for credit risk oversight, is taking over as chief risk officer for Enrico Dallavecchia, who is also leaving the company "to pursue other opportunities in finance and risk management."

But banking industry consultant Bert Ely, a longtime Fannie and Freddie critic, was unimpressed by the changes, noting that the company promoted current executives, rather than hiring from outside.

"I don't see these changes making a dramatic difference in how the whole Fannie and Freddie fiasco plays out," Ely said.

The Bush administration last month unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months.

But Merrill Lynch analyst Kenneth Bruce wrote in a research note Wednesday that speculation about an infusion of capital by the U.S. government is "somewhat premature" as Fannie and Freddie's financial cushion against losses won't be depleted for several quarters. Investors "are overly discounting a possible catastrophic event," he wrote.

Similarly, Citigroup analyst Bradley Ball said in a research note Monday that Fannie and Freddie still have options despite their steep stock declines in recent weeks, adding that "we are not convinced that (the government) needs to take any action over the near term."

Washington-based Fannie Mae completed a $2 billion sale of short-term debt on Wednesday, two days after McLean, Va.-based Freddie Mac sold the same amount of debt.

Large money market funds, which are major buyers of Fannie and Freddie's short-term debt, are still comfortable holding it, said Peter Crane, president of Crane Data LLC, which tracks money market mutual funds.

"Most managers are taking the position that it would unthinkable to imagine a scenario where (the government) wouldn't back the debt," he said.

Other analysts, however, continue to express a gloomier outlook. Peter Schiff, president of Euro Pacific Capital in Darien, Conn., a longtime bearish investor, predicts that the companies' losses could eventually hit $1 trillion or more as housing prices fall far further than most analysts expect.

"The end result is probably going to be that they go bankrupt and the government nationalizes the function," Schiff said. "There's no way they can survive."