- The offering could raise about $30B by selling 5%–15% of Fannie and Freddie’s stock.
- Officials are deciding whether to list the companies together or separately. Both have been under federal control since 2008.
- High-profile investors like Bill Ackman and John Paulson could see major gains if privatization moves forward.
According to the WSJ, the Trump administration plans to launch a public offering of mortgage finance giants Fannie Mae and Freddie Mac later this year. The deal could raise around $30B and mark the biggest push toward privatization since the companies entered federal conservatorship in 2008.
A Potential Milestone
If completed, the IPO would rank among the largest in US history. Officials are debating whether to take the companies public separately or merge them first. The timing and structure remain uncertain due to the complexity of the offering and the firms’ central role in housing finance.
The Details
Fannie Mae and Freddie Mac buy mortgages from lenders, bundle them into securities, and guarantee investor payments. Their shares jumped about 20% after news of the IPO plan.
The federal government holds warrants for roughly 80% of their common stock, plus senior preferred shares. It would sell part of this stake in the offering.
Officials want to keep some form of the implicit federal guarantee, which supports the 30-year fixed mortgage. How this would work is still unclear.
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Political and Financial Backdrop
Senior Trump officials, including Treasury Secretary Scott Bessent and FHFA head Bill Pulte, have met with top Wall Street bank CEOs to discuss the offering.
The plan comes during a slow housing market. High mortgage rates and steep home prices are weighing on affordability.
Investor Stakes
Billionaires Bill Ackman and John Paulson endorsed Trump and hold sizable positions in Fannie and Freddie shares. Ackman has argued the chance of privatization not happening under Trump is “near zero.”
Why It Matters
The public offering could generate significant revenue for the federal government. It would also mark a historic shift in housing finance policy.
Federal backing for mortgages may be reshaped, testing investor appetite for firms tied to government guarantees.
What’s Next
Preparations are still in the early stages. Large IPOs take months or even years to execute.
Skeptics note that previous privatization efforts have failed. However, political momentum and investor interest could speed up the process.
