Key Takeaways:
Trump's $1 trillion valuation claim for Fannie Mae and Freddie Mac reignited speculation about their release from government control, even as the official tasked with executing that plan takes on a second job running U.S. intelligence.
President Donald Trump told reporters Friday that the two mortgage giants could be worth about $1 trillion combined, a figure that briefly sent Fannie Mae shares up as much as 10.4 percent and Freddie Mac as much as 9.7 percent before both gains evaporated by late morning. The rally faded after KBW analyst Bose George pushed back, telling Bloomberg the firm's combined fair value estimate of $200 billion to $250 billion remained unchanged.
"The $1 trillion figure sits far above any credible analysis of these companies' standalone value," said Jaret Seiberg, financial services and housing policy analyst at TD Cowen. "It already was going to be operationally and politically difficult to end the conservatorships. We do not see how one could surmount those obstacles if the FHFA director is devoting most of his time to national security issues."
The comment came days after Trump appointed Bill Pulte — the Federal Housing Finance Agency director overseeing Fannie and Freddie — as acting director of national intelligence, a role that puts him in charge of the CIA and NSA alongside his housing finance duties. Pulte, whose grandfather founded one of the country's largest homebuilders, would retain both positions. Trump said Pulte "has done a phenomenal job at Fannie Mae-Freddie Mac" and described the intelligence post as "not a permanent position."
Fannie Mae and Freddie Mac have been under federal conservatorship since the 2008 financial crisis, when the government seized control to prevent a collapse of the U.S. housing finance system. The arrangement was intended as temporary. Eighteen years later, the two government-sponsored enterprises still guarantee or own about 70 percent of U.S. mortgages, according to the National Association of Realtors, and the federal government holds warrants for roughly 80 percent of both firms' common stock.
The $1 trillion gap
Trump's valuation claim diverges sharply from the companies' actual financials. As of March 31, Fannie Mae's net worth stood at $112.7 billion and Freddie Mac's at $74 billion, for a combined $187 billion — roughly one-fifth of the president's estimate. The administration had previously explored selling shares at a valuation of up to $500 billion to raise about $30 billion for the debt-laden government, Bloomberg reported.
The gap matters because any initial public offering would require agreement on a starting valuation that satisfies both the Treasury, which wants to maximize proceeds, and institutional investors, who will demand a discount for the risk of operating without an explicit government backstop. Without a bailout guarantee during a future crisis, mortgage-backed securities investors would demand higher returns, pushing borrowing costs higher for homebuyers at a time when mortgage rates are already elevated, said Susan Wachter, a professor of real estate and finance at the Wharton School.
Pulte's dual role raises execution risk
Wedbush analyst Michael Piccolo questioned whether Pulte has the "bandwidth required to advance the complex regulatory and capital restructuring work necessary for a recap and release" of the two enterprises. The FHFA must approve any capital plan, set new regulatory standards, and navigate the political process of ending conservatorship — all while Pulte manages 18 intelligence agencies.
Proponents of privatization, including many Republican allies of Trump, argue the companies are viable on their own and that an IPO could raise billions. Billionaire hedge fund manager Bill Ackman of Pershing Square wrote in December that Fannie and Freddie common stock "remains our best idea for 2026." But both stocks have fallen roughly 30 percent year-to-date, and a Reddit forum for GSE investors showed growing frustration this week, with one user posting: "Hate to say it, but Trump has moved on from F2."
Trump met with Wall Street bank CEOs including JPMorgan's Jamie Dimon, Goldman Sachs' David Solomon and Bank of America's Brian Moynihan last August to discuss a potential IPO. Speaking to reporters Friday, Trump said "it's not a rush" when asked about timing. The White House, FHFA, Fannie Mae and Freddie Mac did not respond to requests for an updated timeline.
This article is for informational purposes only and does not constitute investment advice.
