The stocks of Freddie Mac (FMCC) and Fannie Mae (FNMA) are once again surging amid new signs that the Trump administration could be interested in loosening the government’s grip on the US mortgage giants.
The speculation got a boost last week when US Treasury Secretary Scott Bessent appeared to suggest on a podcast called “All In” that the government’s stakes in Fannie and Freddie could land in a new US sovereign wealth fund already authorized by President Trump.
“Government has a big stake in Fannie Mae and Freddie Mac… where does that go?” Bessent said when asked about the sovereign wealth fund, without offering further detail.
The Wall Street Journal also reported this past weekend that the Trump administration has in fact contemplated an executive order that might include studying the privatization of Fannie and Freddie.
A proposal has been shown to the administration, according to the Journal, outlining how Treasury’s ownership of the mortgage giants could be moved to the sovereign wealth fund.
The stocks of Freddie and Fannie — semi-acronyms for Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association — rose more than 8% Monday.
As of 1:01:58 PM EDT. Market Open.
FMCC FNMA
The stocks have each jumped over 350% since Trump’s election win on investor optimism about taking the giants private.
The new speculation comes as the president’s pick to lead the overseer of the mortgage giants, Federal Housing Finance Agency (FHFA) Director William Pulte, has already replaced the boards of each government-sponsored institution and laid off dozens of FHFA employees.
Pulte appointed himself as chairman of both Fannie and Freddie.
Freddie Mac and Fannie Mae both play a central role in the US housing market by purchasing mortgages from lenders and repackaging them as securities. Both fell under government control during the 2008 financial crisis as mortgage defaults soared.
Some prominent Wall Street investors, including Bill Ackman, long ago wagered that the companies would eventually be returned to private control, doing so by purchasing stock in Fannie and Freddie.
Investors hoped the transition would happen during the first Trump administration, only to see that effort fizzle. Now Ackman and others believe a second Trump administration can get it done.
