As President Donald Trump enters the lame-duck era of his presidency, questions remain about which of his various agenda items will actually get accomplished.
One of his long-standing goals has been to end the government conservatorship that mortgage giants Fannie Mae and Freddie Mac have been subject to since the financial crisis of 2008. After failing to make much headway during his first term in office, Trump revived those intentions for his second term—but once again hasn’t made it much of a priority.
This past May, Trump posted on Truth Social that he was “working on taking these amazing companies public,” while adding that the U.S. government would retain its mortgage guarantees and oversight role for both government-sponsored entities. But only a matter of days later, when asked about an initial public offering for Fannie and Freddie, Trump said: “It’s not a rush.”
Meanwhile, Trump also sees the current government control of Fannie and Freddie as an opportunity to address housing affordability. On the eve of the midterm elections, he announced at a rally in Kansas that the entities would invest $4.3 billion in home loans in the state next year, which he promised would help 15,000 people achieve their American dream.
Removing Fannie and Freddie from conservatorship, experts have cautioned, could push up mortgage rates. And because Democrats regained control of Congress by campaigning on affordability, that may make them reluctant to entertain an end to this long-standing conservatorship now, when so many Americans are grappling with an affordability crisis.
Further complicating matters is how, exactly, the Trump administration could go about ending the conservatorship—whether by an executive order or with support from Congress. Legal and political analysts are divided on whether that could happen or if Trump would need support from Congress, as Realtor.com reported.
Frank Cassidy, the former federal housing commissioner in Trump’s second term, told the outlet that Trump can privatize Fannie and Freddie without Republican control of Congress, but noted that how they were structured post-conservatorship would matter.
“It hasn’t been a priority yet,” Cassidy told Realtor.com. “It would need to be worked on very quickly because it will take some time.”
A PUSH FROM WALL STREET
One person who’d very much like privatizing Fannie and Freddie to be a priority is hedge funder Bill Ackman. He says that removing these entities from conservatorship would be “helpful” for improving housing affordability because it would remove any political uncertainty from the mortgage market, particularly if Democrats were to use Fannie and Freddie in the future to “achieve political objectives.”
Of course, he has an incentive at stake: His firm, Pershing Square, is invested in both Fannie and Freddie. Though the companies were delisted from the New York Stock Exchange in 2010, they have traded in the over-the-counter market ever since.
Still, Ackman argues that Americans stand to benefit from ending the conservatorship. “This is a major point of economic policy where the president can have a hundreds of billion-dollar win for the American people,” he told CNBC, adding that it could be a “windfall” to the tune of $500 billion.
WEIGHING THE CONSEQUENCES
Such optimism for a widespread benefit to Americans counters what Treasury Secretary Scott Bessent expressed on a 2Way podcast appearance last month.
While Bessent said that the Trump administration will tackle the ownership structure of Fannie and Freddie in either 2027 or 2028, he said the “north star” guiding a decision will be whether ending the conservatorship can be accomplished without meaningfully increasing the spread between mortgage-backed securities and Treasury yields.
“It’s unclear why homeowners or mortgage holders would benefit from a change in the arrangement of the shareholder structure,” Bessent said.
What people on both sides of the political aisle can agree on is that a rush to end an 18-year arrangement would be most problematic. Still, the clock is ticking on Trump’s time in office to accomplish this goal, with less than 800 days remaining.
And one person who could stand in the way is Rep. Maxine Waters, a Democrat from California, who is running to chair the House Financial Services Committee again after serving on it for more than a decade.
As Realtor.com reported, Waters has historically opposed any efforts to rapidly end the conservatorship without comprehensive congressional oversight. “To address the affordable housing crisis, Congress must ensure that Fannie and Freddie meet their mission to provide liquidity, sustainability, and affordability to all housing markets in the U.S., and at all times,” Waters said at a hearing in April.