13 min agoMay. 28, 2025 7:38 pm
After more than 15 years in federal conservatorship, Fannie Mae and Freddie Mac are once again at the center of a political and financial tug-of-war. President Trump ignited market enthusiasm last week with a series of social media posts declaring his intent to take the mortgage giants 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 May 21st on his Truth Social platform. “Stay tuned!”
The posts sent shares of Fannie and Freddie soaring by as much as 38% and 34%, respectively, as investors speculated that the Trump administration could pave the way out of conservatorship. The two government-sponsored enterprises, which back roughly 70 percent of the $12 trillion U.S. home loan market, have been under federal control since the 2008 financial crisis.
In a May 27th Truth Social post, President Trump clarified that the U.S. government would maintain its guarantees and oversight of Fannie Mae and Freddie Mac, even as he pursues taking the mortgage giants public.
Investors have long advocated for their release, which could unlock billions in shareholder value. Strategist Steven Abrahams of Santander Capital Markets projected that a public offering could generate as much as $382 billion, making it among the largest IPOs in history.
Yet the path forward is riddled with complexity. Any public offering would require close coordination between Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Federal Housing Finance Agency (FHFA) Director Bill Pulte, all of whom Trump named as part of his inner circle on the issue. Analysts warn that privatization, especially without careful structuring of government support, could inject volatility into the housing market.
Mortgage-backed securities backed by Fannie and Freddie are considered some of the safest assets in the world, thanks mainly to the assumption of federal support. If that backing is weakened or made ambiguous, investors may demand higher yields, which in turn could lead to higher mortgage rates. Some surveys suggest rates could climb by 0.5 percentage points or more under certain privatization scenarios.
FHFA Director Bill Pulte has emphasized the importance of a careful approach to any effort to release Fannie and Freddie from conservatorship to ensure market stability. Any such plan would also require navigating a web of complex details, including the size and structure of the initial offering and how to handle existing shareholders, whose legacy shares continue to trade and could complicate the path to privatization.
For Trump and allies like hedge fund manager Bill Ackman, the push to privatize Fannie and Freddie is as much a political power play as it is a financial windfall. A successful sale could inject billions into federal coffers, appease deficit hawks in Congress, and deliver a symbolic victory for free-market advocates eager to roll back post-crisis government intervention. But with the stability of the housing market hanging in the balance, the upside comes with high economic stakes.
