President Trump indicated late Wednesday that he is giving “very serious consideration” to ending the conservatorship of mortgage giants Fannie Mae and Freddie Mac and bringing them back to public markets.
- In a post on Truth Social, Trump said he was “giving very serious consideration to bringing Fannie Mae and Freddie Mac public.”
- “Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right,” Trump wrote.
Experts: Trump signaled that discussions with key officials—including the Treasury Secretary, the Commerce Secretary, and the director of the Federal Housing Finance Agency (FHFA)—are forthcoming before a final decision.
Reminder: Investor Bill Ackman has long advocated for releasing Fannie and Freddie from government control. In late 2024, he tweeted optimism about Trump’s ability to accomplish what had previously stalled:
- “During Trump’s first term, Secretary Mnuchin took steps toward this outcome, but he ran out of time. I expect that in the second @realDonaldTrump administration, Trump and his team will get the job done.”
- Ackman further argued that successfully bringing Fannie and Freddie out of conservatorship could yield more than $300 billion in additional profits to the federal government.
Credit Impact: Fitch Ratings cautioned in January that exiting conservatorship could initially be credit negative for the two firms. However, they noted “exiting conservatorship would be incrementally credit negative but unlikely to immediately affect ratings on its own.”
- According to Fitch, if Fannie and Freddie adhere to FHFA capital requirements, maintain robust earnings, and preserve their dominant market roles, standalone ratings in the “A” category could be achievable.
- Yet, Fitch warned ratings could suffer if capital requirements loosen or market positions weaken post-conservatorship.
Impact on Rates: For borrowers, implications remain uncertain. On one hand, independent operation might lead Fannie and Freddie to adopt more conservative lending practices without direct government oversight.
- On the other, there’s concern recalling their history of excessive risk-taking that led to the 2008 bailout.
- However, there are Economists like Kevin Erdmann who counter that narrative, arguing Fannie and Freddie never truly needed government intervention.
Bottom Line: No one knows the impact if Fannie and Freddie leave their conservatorship, and no one knows if the Trump administration will actually be able to or want to do it.
