The US Treasury Department and Federal Housing Finance Agency announced a roadmap to release government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from conservatorship, restoring the Treasury’s power to approve any such plan. The goal is to ensure an orderly release that reflects existing practices.
Fannie and Freddie are known as GSEs and underpin the US housing market by purchasing loans and packaging them into securities for sale to investors. The federal government took control of the companies during the 2008 financial crisis, providing a $187.5 billion bailout in exchange for senior preferred shares.
The agreement aims to establish a process for ending conservatorship, seeking public comment and consulting with regulatory bodies. A senior Biden administration official noted that the plan sets expectations for market participants and Congress on how an end to conservatorship might proceed.
Hedge fund manager Bill Ackman recently recommended buying Fannie and Freddie’s common stock, citing improved capital positions and strong performance potential in a challenging housing market. The announcement comes just days before Donald Trump is scheduled to be sworn back into office as president.
Source: https://finance.yahoo.com/news/us-treasury-wins-back-key-213919257.html