The Trump administration eventually will become involved publicly with the FHFA and both GSEs. We do not have any detailed Administration plans for the GSEs. We only know that some form of GSE privatization is a target. This has been stated by Mnuchin (Treasury) and Mulvaney (OMB).
A new FHFA Director needs to be nominated and then confirmed. This is likely to occur by the end of the year and after the midterm elections. Once the new FHFA Director is in place, Treasury and the OMB will engage with the FHFA, the GSEs and perhaps the bumbling Congress.
Administrative action can end the conservatorships. The Congress is not needed for that. The Congress is needed if the GSE charters are to be changed. The basic options are to 1) continue the chartered ties of the GSEs to the US Government with the same missions and conditions or with different missions and conditions or to 2) free them to function as wholly private corporations chartered and regulated by the FHFA or by the Financial Stability Oversight Council (FSOC), as public utilities similarly regulated by a selected agency or some other corporate form.
Given the current political climate and environment in Washington and the various goings on there, it is not easy to draw a timeline of possible future Administrative and Congressional actions.
The GSE stock prices are not currently based on the financial fundamentals, daily actions and progress of the GSEs. There is a disconnect. A reconnect is expected.
The stock price is tied to news of minor developments, court decisions and rumors. The price is manipulated by market makers who trade by an agreed to financial mandate and also by day, momentum, short and short term traders and who try to make a few bucks when the stock rises and falls.
