Treasury quits bid to privatize Fannie Mae, Freddie Mac

Biden to focus them on boosting housing affordability and ownership

Treasury Secretary Steven Mnuchin with Donald Trump. (Getty)
Treasury Secretary Steven Mnuchin with Donald Trump. (Getty)


The Trump administration, which has a lot going on in its final days, is dropping its effort to return Fannie Mae and Freddie Mac to private hands, the Wall Street Journal reported.

The mortgage giants were put under government control when the bursting of the housing bubble triggered the financial crisis of 2008. Now the Biden administration must decide their future.

Advisers to Biden say he’s in no rush to privatize the companies and will instead focus on ways to use them to boost housing affordability and ownership. By buying and securitizing mortgage loans, Fannie and Freddie backstop about half of the nation’s $11 trillion mortgage market.

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

Read more

Under the agreement reached during the Great Recession, Fannie Mae and Freddie Mac were allowed to retain just $45 billion of earnings between them, turning profits beyond that over to the Treasury, but now will be able to keep roughly $280 billion as a cushion against possible losses.

Treasury officials said they are unwilling to significantly restructure the government’s senior stakes in the firms, now valued at roughly $230 billion, which would have put the companies on a path to exit government control.

[WSJ] — Sasha Jones