Trump preparing share sale plans for Fannie Mae and Freddie Mac
Add Axios as your preferred source to
see more of our stories on Google.
Photo: Joe Raedle/Getty Images
The Trump administration is preparing plans to sell stock in mortgage-finance giants Fannie Mae and Freddie Mac that could kick off before the end of the year, a senior administration official confirmed.
Why it matters: Significant changes to Fannie and Freddie's capitalization structures, or any signal of weaker government backing, could have big implications for the mortgage market.
Zoom in: Certain plans under discussion involve the sale of between 5% and 15% of the companies' shares, while valuing Fannie and Freddie at a combined $500 billion or more, the WSJ reported earlier Friday.
- Such a deal would raise as much as $30 billion for the federal government.
- Officials are still said to be debating whether the two companies — both under government conservatorship since the 2008 financial crisis — would sell shares separately or as a single entity.
- The president is weighing all options, the senior administration official told Axios.
Zoom out: President Trump in May wrote on Truth Social that he was "giving very serious consideration" to bringing Fannie and Freddie public, saying they were "throwing off a lot of CASH," and that the time "would seem to be right."
- In recent weeks the president and other top administration officials have met with the CEOs of Morgan Stanley, JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo and Bank of America to discuss potential plans, per the WSJ Friday.
Reality check: This would be a complex deal, and many details of any plan — including whether the companies would remain under government conservatorship — are not clear.
Context: Fannie and Freddie play a key role in the housing mortgage system — providing liquidity by buying mortgages from lenders like banks and other originators.
- They either hold those loans themselves, or sell them on to investors in the form of mortgage-backed securities, while guaranteeing investors against default. This assumption of risk has the effect of holding down mortgage interest rates.
What we're watching: Trump has said in the past that he wants to keep that guarantee in place through any plan to sell shares in the companies.
