Fannie Mae (FNMA)

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Cowen: White House Doesn’t Favor Killing Fannie and Freddie

March 15, 2018 ... By Paul Muolo ... [e-mail]



President Trump isn’t likely to pull the plug on Fannie Mae and Freddie Mac during his reign in Washington, according to a new report from Cowen & Co.

“We believe government support for the 30-year, fixed-rate mortgage is critical to the health of the housing market,” writes Cowen analyst Jaret Seiberg. “While there are conservative forces within Team Trump that may want to shrink Fannie and Freddie or even eliminate them, our view is that the president is not willing to go that far as he wants a strong economy.”

Seiberg adds: “Pulling the rug out from under the mortgage market would put his economic record at risk. This does not mean the door is closed to reform. It just suggests that reforms will result in a government credit guarantee on MBS to ensure there are still cheap, relatively easy to obtain 30-year, fixed-rate mortgages.”

Cowen’s new report is entitled “Future of Housing: 10 Policy Reasons to Be Positive.” Congress is not likely to produce consensus-forming GSE legislation this year, leaving the future of Fannie and Freddie in the hands of the Treasury Department – which controls the senior preferred stock of the GSEs – and the Federal Housing Finance Agency.