"Now, the Trump Administration wants to reprivatize Fannie Mae and Freddie Mac, indicating that an IPO could occur as early as year's end, yet providing few policy details. This lack of transparency raises concerns that a hasty insider-driven exit from conservatorship will erode the safeguards that have kept the housing market stable, exacerbate systemic risks, and primarily enrich shareholders."
"Fannie Mae and Freddie Mac are government-sponsored enterprises that play a central role in America's housing market. They buy qualifying mortgages from lenders, bundle them into mortgage-backed securities, and sell them to investors. This frees main street lenders to make new loans, keeping credit flowing and rates lower for homebuyers. But excessive risk-taking by these enterprises helped bring about the 2008 crash and Great Recession, leading them to be placed under federal conservatorship."
"The Trump Administration says privatization will spur innovation and improve housing affordability. But if hastily done and without strong safeguards, it would do the opposite: raise borrowing costs for everyday Americans and encourage the type of risk-taking that fueled the Great Recession. There is no urgency to re-privatize Fannie Mae and Freddie Mac-they have been operating successfully under conservatorship since 2008."
Fannie Mae and Freddie Mac buy qualifying mortgages, bundle them into mortgage-backed securities, and sell them to investors, which enables lenders to issue new home loans and keeps rates lower. Excessive risk-taking by the enterprises contributed to the 2008 crash and Great Recession, resulting in federal conservatorship, FHFA governance, and operational guardrails to stabilize the housing market. A proposed reprivatization and IPO with limited policy transparency raises fears of a rushed, insider-driven exit that could erode safeguards, increase systemic risks, and primarily benefit shareholders. Any release from conservatorship should be deliberate, transparent, and grounded in the public interest.
Read at Fortune
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