Several Wall Street banks are pitching President Donald Trump about handling the initial public offering (IPO) of Fannie Mae and Freddie Mac, sources told FOX Business Network’s Maria Bartiromo.
Bartiromo reported Friday morning on “Mornings with Maria” that, “Wall Street banks are cozying up to President Trump right now because they want the business of the Fannie and Freddie IPOs if that’s where this is going.”
“My sources tell me there are a number of banks who are visiting the White House to try to get President Trump to give them the business to take Fannie Mae public again as they sell their stakes,” Bartiromo said.
“I can confirm that Bank of America and its leadership was in the Oval Office last week. Citigroup and its leadership was in the Oval Office last week. JPMorgan wants the business, Goldman Sachs wants the business – they all want the IPO,” she said.
US REGULATOR DIRECTS FANNIE MAE, FREDDIE MAC TO CONSIDER CRYPTOCURRENCY AS AN ASSET
Bartiromo reported that the deal is expected to happen in the fall or winter of 2025 and that the administration is focused on getting a return on its investments in Fannie and Freddie, rather than on raising capital for the entities.
Bartiromo said that the initial sale of the government’s stake in Fannie Mae and Freddie Mac could be upward of $30 billion or more. That amount would be roughly the size of the IPO of Saudi Aramco, which brought in proceeds of more than $29 billion.
TREASURY’S BESSENT SAYS FIXING HOUSING AFFORDABILITY CRISIS WILL BE ONE OF HIS ‘BIG PROJECTS’ THIS FALL
She discussed the potential IPOs during Thursday’s episode of “Mornings with Maria” during an interview with Treasury Secretary Scott Bessent, who said that “it will depend on the size of the stake and the overall valuation of the companies.”
“We are examining all the options in terms of how to proceed. We’ve had lots of banks coming through. The president is very engaged with this. The housing market is obviously very important in the U.S., we’ve got an affordability crisis,” Bessent said.
“There are two pieces here, Maria: How can we maximize the value for the U.S. taxpayer with Fannie and Freddie? On the other side, how can we keep mortgage rates – the spread between mortgages and Treasuries – flat or even bring that down to address this terrible affordability crisis in housing that developed during the Biden administration,” Bessent said.
TRUMP CONSIDERS TAKING MORTGAGE GIANTS FANNIE MAE AND FREDDIE MAC PUBLIC
Fannie Mae and Freddie Mac are government-sponsored enterprises that play a key role in the mortgage market by providing liquidity to lenders and guaranteeing many of the mortgages in the U.S., which reduces risk for lenders and investors.
Fannie and Freddie purchase mortgages from lenders and either hold them within their portfolios or bundle those loans into mortgage-backed securities (MBS) that can be sold to investors. The National Association of Realtors noted that they support about 70% of the U.S. mortgage market through this process.
The two entities were created under congressional charters and operated as private companies until the housing market deteriorated in the 2007-08 financial crisis that threatened the solvency of Fannie Mae and Freddie Mac, prompting a federal bailout to the tune of $191 billion.
Fannie and Freddie were taken into conservatorships by the Federal Housing Finance Agency in 2008 amid the financial crisis to reduce losses, stabilize the firms’ operating structures and eventually end the conservatorship by re-privatizing them.
The two government-sponsored enterprises have since returned to profitability. The Congressional Research Service noted that Fannie and Freddie paid dividends totaling more than $301 billion to the Treasury as of July 2020.
Read the full article here
