Key points
- Trumps say he will speak with Treasury Secretary Scott Bessent
- The issue has dogged administrations as far back as Barack Obama’s
- US government has around 80pc ownership of Fannie Mae and Freddie Mac
ISLAMABAD: United States President Donald Trump said on Wednesday he will make a decision in the near future about taking mortgage finance firms Fannie Mae and Freddie Mac public, saying that he is giving “very serious consideration” to doing so.
“Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right,” Trump said in a post on Truth Social.
He said he will speak with Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Federal Housing Finance Director William Pulte.
The move, if confirmed, could resolve an issue that has dogged administrations as far back as Barack Obama’s, offering possible dividends for investors, but risking driving up borrowing rates for homebuyers.
“Very serious consideration”
“I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” Trump said.
“I will be speaking with Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick, and the Director of the Federal Housing Finance Agency, William Pulte, among others, and will be making a decision in the near future.
The firms do not originate consumer mortages, but buy them on the secondary market from banks and other lending institutions, then bundle them and sell them on as investment products, guaranteeing the principal and the interest.
That protects investors, and injects liquidity into the mortgage market, permitting institutions to offer the kind of long, fixed-rate mortgages popular with American buyers.
2008 crisis
The US government took around 80 per cent ownership of Fannie Mae and Freddie Mac in 2008 when the world’s financial systems were upended by a crisis that began in the American subprime mortgage sector.
The firms had to be bailed out because of their exposure to so many mortgages that had gone into default, and the US government at the time intervened as part of a mammoth effort to unstick global liquidity.
They have since paid back their debts to the US taxpayer and now have tens of billions of dollars on hand.
Promote competition
Advocates for privatising them say it would promote competition and move risk from taxpayers to private investors.
But opponents say the process could reduce liquidity in the mortgage market, which would drive up interest rates and reduce availability of home loans to lower income borrowers.
