WASHINGTON–Seventeen years after the financial crisis, the Trump administration has released new details around its plans to release Fannie Mae and Freddie Mac from conservatorship and to sell shares on the stock market by year-end.
Fannie and Freddie have been under the government’s control since the housing market meltdown of 2008, and remain the foundation to the $12 trillion U.S. mortgage market.
The Trump administration believes the two companies could be valued at around $500 billion collectively, two people told the New York Times.
While some shares of the companies still trade over the counter, the new shares would be listed on a major stock market and could yield tens of billions of dollars, according to the report.
Trump had earlier said in a social media post that the companies were “throwing off a lot of CASH, and the time would seem to be right.”
According to the Times, plans for the sale appear to have accelerated over the past three weeks, as Trump summoned chief executives of the nation’s largest banks into meetings at the White House.
Bank Execs at Meeting
Trump asked bank executives, including Jamie Dimon of JPMorgan, David Solomon of Goldman Sachs, Brian Moynihan of Bank of America and Jane Fraser of Citigroup, to explain how they would execute a deal.
“It’s unclear just how the plan would work. A critical question that was not resolved in the meetings with bankers is whether Fannie and Freddie would remain under government control after the stock sale,” the Times reported. “On one hand, a government-controlled company would mitigate the risks to investors and the mortgage market, but it would also leave investors with less sway over the company’s decisions.”
Uncertainty Remains
The Times analysis added that it’s unclear exactly how stock market investors would value the mortgage giants and whether that valuation would be anywhere near the $500 billion price tag the Trump administration is discussing.
As the CU Daily has previously reported, plans for taking Fannie and Freddie out of a government conservatorship have been discussed on and off for years without any agreed-upon solution for doing so.
