This week, President Trump made a long-awaited announcement concerning the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). On Tuesday, Trump wrote in a Truth Social post: “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President.” While part of his proposal is sound—these two government-sponsored enterprises (GSEs) should indeed be removed from Federal Housing Finance Authority (FHFA) conservatorship—the implicit government backing of the GSEs must be removed, too.
The GSEs have been under FHFA conservatorship since September 2008, when their bankruptcy quickly precipitated a wider financial crisis. They remain a singular force in housing finance. Fannie and Freddie currently hold more than $7 trillion in mortgages. Most of these mortgages have funded purchases of single-family residential property and account for about half of all such finance. The GSEs also provide about one-third of multifamily mortgage finance.
