The mortgage giants have operated under federal conservatorship since September 2008 and currently trade over the counter. A transition back to private hands requires recapitalizing both firms, potentially with common equity, alongside unwinding the Treasury Department's roughly $388 billion position in preferred securities and warrants. Treasury Secretary Scott Bessent affirmed plans to tackle the ownership structure before President Trump's term concludes, committing to prevent any rise in mortgage-backed security spreads. Congressional legislation may also be necessary to redefine federal guarantees in the mortgage financing sector.
Key points
Billionaire investor Bill Ackman believes ending federal control could ultimately increas…: Billionaire investor Bill Ackman believes ending federal control could ultimately increase the companies' stock values tenfold.
Treasury Secretary Scott Bessent stated the administration aims to address the ownership…: Treasury Secretary Scott Bessent stated the administration aims to address the ownership structure before President Trump's term ends.
Privatization efforts must avoid widening mortgage-backed security spreads to prevent hom…: Privatization efforts must avoid widening mortgage-backed security spreads to prevent home loan borrowing costs from rising.
Sources checked by our analysis pipeline: 1
The midterm elections could be a turning point for the release of Fannie Mae and Freddie Mac from government control, according to billionaire investor Bill Ackman.
Investors may agree with him, if the rally in both stocks is any sign.
The Federal National Mortgage Association, known as Fannie Mae, and Federal Home Loan Mortgage Corporation, or Freddie Mac, have each jumped more than 60% from Oct. 14 to Monday's close. The stocks were both up roughly 3% on Tuesday.
Ackman, the founder of Pershing Square Capital Management, has long pushed for the two entities to be released from federal conservatorship.
"The reason why it's not being touched right now is, you know, midterms," he said in an interview with CNBC's "Squawk Box."
Ackman, who owns both names through Pershing Square, believes Freddie and Fannie have the potential to increase "10-fold from current share prices," he said in his quarterly letter to shareholders, issued on Monday.
Fannie and Freddie buy mortgages from banks and other lenders, and then package them into mortgage-backed securities, known as MBS. Their operations are critical to…
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Investors navigated a fragmented market environment as major indices moved in varying directions by the closing bell. Downward pressure was particularly evident in blue-chip equities, dragging down the benchmark average. The divergent session highlights an uneven trading landscape across the broader market.