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This is either a bug, or a very weird but undocumented feature/caveat.
def fn1():
 while True:
 try:
 raise Exception()
 finally:
 pass
def fn2():
 while True:
 try:
 raise Exception()
 finally:
 break # <-----
fn1() # exception, as expected
fn2() # silence!

This *was* a documented feature until very recently; it looks as though a recent doc change inadvertently removed it from the documentation. See
http://hg.python.org/cpython/rev/bef098bd3fa5
and the associated issue, issue 14167.

It looks to me that it was not removed from the doc but explicitly changed to say that 'break' does not cause the exception to be discarded, unless I'm misunderstanding it:
 1.20 +:keyword:`finally` clause is executed. If there is a saved exception
 1.21 +or :keyword:`break` statement, it is re-raised at the end of the
 1.22 +:keyword:`finally` clause. If the :keyword:`finally` clause raises

Hmm. Yes, true. Either way, it's the docs that need to be fixed rather than the behaviour.
Thanks for catching this!

see the issue 14167 

That portion of the documentation has been restored. Closing this issue.