President Trump wants to take Fannie Mae and Freddie Mac public. The plan has some problems.
Wall Street and Washington, the DC, the Trump administration, this year, the mortgage giants Fannie Mae and Freddie Mac reigns how to attract a potential public presentation.
The Trump administration created the idea of selling the shares of government of two giants, which is a movement that will have the greatest public offering in history under the current values. The exact mechanics of such an agreement has not yet been clarified.
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The plans discussed within the administration reported by the Wall Street Journal may include 5% to 15% of Fannie and Freddie shares at a combined 500 billion dollar valuation or higher price. However, they see some problems that need to be solved along the way to attract investors, analysts and housing experts.
Meanwhile, President Trump is still weighing all his options. This means that plans can change. Jamie Dimon of Jpmorgan Chase, Bank of America’s Brian Moynihan and Jane Fraser of Citigroup to discuss the Mortgage giants, to discuss their giants.
Last weekend, he added more fuel to his public offering idea, sharing The appearance of a doctor who steals the bell on the New York Stock Exchange.
Fannie and Freddie Advisor: CEO of JPMorgan Chase, Jamie Dimon in New York. (Photo: Noam Galai/Getty Images) ·Noam Galai through Getty Images
Behind Trump is neither a poster for Fannie nor Freddie, but a single entity called “Great American Mortgage Corporation” listed by stock maga.
So far, the government’s plan to initiate a public presentation for mortgage giants has left analysts and housing experts a little confused. Some question if such a large and complex stock offer can be made before the end of 2025.
In order to hit this timeline, the Trump administration will have to act very quickly from some very weed and important policy debates to hit this timeline, a former Bush White House and Treasury official.
Fannie Mae and Freddie Mac, also known as the Federal National Mortgage Association (FNMA) and Federal Housing Loan Company (FMCC), play basic roles in the US housing market by acquiring mortgage and then selling and selling them to investors.
Both fell to the government conservatory during the 2008 financial crisis, when mortgage defaults increased. It has been a long and warmly discussed issue to solve the two companies from the control of the government.
Some leading Wall Street investors, including billionaire Bill Ackman and John Paulson, expected the conservatory to end the two companies by buying a common and preferred stock in Fannie and Freddie years ago.
The first Trump administration aimed to do this, even hired Morgan Stanley and JPMorgan Chase for advice. After all, he couldn’t handle it.
Such policy debates revolve around weighing the potential benefits of reducing the risk of federal government in giants against the risk of disrupting the housing market.
Mason is also possible to try to have some kind of market offer without answering all key questions. ” He added.
Is it for sale? Fannie Mae Center in Washington. (AP Photo/Manuel Balce Cenneta, File) ·Associated Press
The most important questions for potential public offering investors are whether the mortgage giants can promise shareholders to some extent with a relatively stable profit level.
According to KBW analyst Bose George, management has at least two basic problems to meet these guarantees.
Mortgage giants have a significant feeling in the preferred stocks, which are currently over $ 340 billion, Fannie and Freddie Senior, in exchange for saving their giants more than a decade ago.
The traditional thought is that the federal agency should solve or transform stocks into ordinary stocks, and both options offer potential cases from taxpayers or existing shareholders.
“With the idea that there may be a very scattered start for a public offering, especially the idea that there may be a large amount of lawsuits.” He said.
The other problem is that the mortgage giants encounter a space of 181 billion dollars in the amount of loss absorbent capital in case of a regression. Meeting this minimum requirement would not only take a better part of the decade, but at the same time, each of the giants would greatly drag each of the self -return “no one will take the share”.
But perhaps the biggest problem is if the Trump administration addresses investors too much.
Former Obama Management Housing Advisor Jim Parrott said, “If you deal with Fannie and Freddie, very hello to the very attractive management for investors,“ There is all kinds of risks for the housing system and the host ”.
So far, the Trump administration has avoided revealing how the government plans to achieve the mass perception that these companies will return in a crisis.
This guarantee allows Fannie and Freddie to receive mortgages, packaging as a bond, and sell it to investors in a lower credit rating. It is warmly discussed whether the administration has to take more steps to ensure that this guarantee does not weaken.
Pimco’s Public Policy President Libby Cantrill, as a note to customers this week, Fannie, Freddie and some problems are not dealt with if there is any status change between the government, “Many Americans may encounter higher mortgage rates without realizing.”
“Housing complex, real estate agents, home builders, lenders, banks, banks have a wide communication task for everyone.”
David Hollerith is a senior reporter for Yahoo Finance, which includes other fields in banking, crypto and finance.
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