Trump is planning a massive IPO of the government's mortgage companies

CNN

2 days ago

President Donald Trump and his economic advisers are planning a historic sale of stock in Fannie Mae and Freddie Mac, the government-owned mortgage giants that help provide stability and affordability to America's home loan market.
The plans, first reported by the Wall Street Journal, have not yet been finalized, and Trump continues to weigh various options, according to a senior administration official. But the White House believes an initial public offering of up to 15% of the two companies' shares could raise $30 billion, which could make it the largest IPO in history.
The president has been weighing an IPO for years. Trump's first administration tried — and failed — to privatize Fannie and Freddie from the government conservatorship. But Trump has renewed his effort in his second term. In May, he posted on Truth Social that he was 'giving very serious consideration to bringing Fannie Mae and Freddie Mac public.' He said would consult with cabinet members and make a decision 'in the near future.'
Trump has met with various Wall Street bank CEOs in recent weeks, including JPMorgan's Jamie Dimon, Goldman Sachs' David Solomon and, this week, Bank of America's Brian Moynihan, with whom Trump discussed a potential Fannie and Freddie IPO, according to a source familiar with their discussions.
Many of Trump's allies in the Republican Party have long advocated for ending the government conservatorship that Fannie and Freddie were placed under during 2008 global financial crisis. The conservatorship ensured their survival during the housing crisis that precipitated the Great Recession, but government control of the two entities was intended to be temporary.
Proponents say the companies are viable on their own, and returning Fannie and Freddie to the public could help raise money for a government that is flooded with debt.
But some economists have warned that attempts to privatize Fannie and Freddie could upset the balance in the mortgage market, making it even more expensive for Americans to borrow money to purchase a home. Mark Zandi, chief economist at Moody's Analytics, estimated in 2024 that privatization could cost the typical American taking out a new mortgage between $1,800 and $2,800 per year.
Critics have also noted that Fannie and Freddie have enormous backing from hedge fund investors, so much of the proceeds of an IPO would go to wealthy financial backers, not taxpayers.
The companies guarantee 70% of America's mortgages. Although they don't issue mortgages to borrowers, Fannie and Freddie help ensure America's housing market functions properly: They buy mortgages from lenders and repackage them for investors, helping money flow in and out of the housing market.
Fannie and Freddie are both instrumental in making 30-year mortgages possible – and relatively affordable (although rates have surged in recent years for a variety of reasons).
An IPO would return Fannie and Freddie to their pre-2008 state, when they were publicly traded companies backed by the US Treasury. They were placed under government control on September 7, 2008, after facing massive losses amid crashing home values. A week later, Lehman Brothers collapsed, sparking a global financial crisis.