The Trump administration is considering the privatization of Fannie Mae and Freddie Mac through an initial public offering (IPO) that could begin this year, selling between 5% and 15% of their shares. The transaction could raise around $30 billion, potentially becoming the largest IPO in history. These government-controlled entities, valued at over $500 billion, play a key role in U.S. housing finance, backing approximately 70% of the mortgage market.
Trump has discussed the plan with major banks and confirmed that the government will maintain oversight and implicit guarantees even after ending conservatorship. The privatization aims to monetize the government’s stake, reduce moral hazard created by federal guarantees, and force Fannie and Freddie to operate responsibly, although it could temporarily raise mortgage rates.
Hedge fund manager Bill Ackman estimates that privatization could generate $300 billion in profits for the Treasury and eliminate around $8 trillion in liabilities from the federal balance sheet, although these figures depend on the stock price, projected between $31 and $34 after the IPO, expected in 2026.
Experts note that the success of the process will depend on how the transition is structured and whether some form of guarantee is maintained to preserve confidence in the $13 trillion U.S. mortgage market.
