By Utkarsh Shetti
Jan 9 (Reuters) – U.S. President Donald Trump’s order for Freddie Mac and Fannie Mae to buy $200 billion in mortgage bonds raises doubts about their privatization plans, analysts say.
Fannie and Freddie, created by the U.S. Congress to support the housing market, have been under government control since their bailout during the global financial crisis of 2008.
Efforts to re-privatize the companies, including during Trump’s first presidency, had failed to gain traction, but hopes of their long-pending privatization resurfaced following his re-election.
“Because I chose not to sell Fannie Mae and Freddie Mac in my First Term … it is now worth many times that amount…,” Trump wrote in a Truth Social post on Thursday.
His comments come as affordability becomes a hot political issue amid a sagging approval rating ahead of the midterm elections. The purchases are aimed at lowering mortgage rates and monthly payments to make housing affordable, Trump said.
“Trump praised his decision not to IPO the companies in his first term … This does not sound like a President who is in a rush to IPO the enterprises,” TD Cowen analyst Jaret Seiberg wrote in a note.
Freddie Mac and Fannie Mae did not immediately respond to Reuters’ requests for comment.
The use of these companies to finance his ambitions serves as a negative prospect for ending the conservatorship of the companies, analysts note.
“If the GSEs (Government-Sponsored Enterprises) can serve as a funding arm for Presidential policy, we shouldn’t ever expect them to be re-privatized again,” JonesTrading analyst Mike O’Rourke said.
Pershing Square’s Bill Ackman in November cast doubts about the possibility of an IPO for the companies in the short term, calling the sale of a piece “neither feasible nor desirable at this moment.”
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Anil D’Silva)
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