Bloomberg Intelligence Fannie, Freddie to Keep US Guarantee If Taken Public, Trump Says
May 28, 2025
The discussions kick off with Trump asserting that Fannie Mae and Freddie Mac will keep U.S. guarantees even if they go public, a move that could reshape the housing market. Analyzing retail earnings, Macy's exceeds expectations while Abercrombie & Fitch boosts its outlook, offering insights into consumer trends. In the automotive world, Stellantis faces a leadership shake-up as they bring in a new CEO to navigate challenges amid a turbulent market. The podcast dives into the evolving economic landscape, touching on tariffs and the electric vehicle sector's hurdles.
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Government's Role in Fannie and Freddie
- President Trump wants the U.S. government to retain guarantees over Fannie Mae and Freddie Mac, even if they're public.
- The government currently owns preferred shares and majority warrants, controlling the firms financially.
Future Government Backstop Fees
- Fannie and Freddie currently enjoy significant government liquidity support under the 2008 preferred stock purchase agreement.
- The government may keep backing the firms but charge fees for liquidity commitments going forward.
Government Mortgage Market Support
- The U.S. mortgage market benefits from government involvement, supporting unique products like 30-year fixed-rate notes.
- However, the government should apply narrow, explicit limits after lessons learned from 2008.