WOOOOOOOOOO!!!
Over the last several weeks, I think we’re finally starting to get a much clearer picture of how this administration is looking at Fannie Mae and Freddie Mac, and honestly, I still think the market is reading a lot of this wrong.
To me, it’s becoming more obvious that these companies are not being viewed as broken institutions that need to stay under government control forever. If anything, the opposite seems true. Trump has now publicly talked about the GSEs multiple times and referenced valuations ranging from hundreds of billions to potentially over a trillion dollars. Whether you agree with those exact numbers or not isn’t really the point. The point is how he’s framing them: as extremely valuable assets. That matters.
His “schmuck insurance” comment also stood out to me more than most people seem to realize. I don’t think that was random. The message was basically: don’t rush to sell or monetize something too early if there’s a chance you’re leaving huge value on the table. Applied here, that sounds a lot like a strategy centered around maximizing value first and worrying about timing second.
He also explicitly talked about taking them public.
That’s important because it suggests a path where Treasury eventually monetizes its position through the equity markets instead of just sitting in conservatorship forever. That has always made the most sense to me financially. The biggest payday for the government likely comes from allowing the market to assign a real private valuation to these businesses.
A lot of people also completely misunderstood the $200B MBS purchase directive. The market initially took that as another sign of government overreach or deeper control, but I don’t really see it that way. Buying higher-yielding MBS funded by lower-cost borrowing can improve earnings, stabilize spreads, and reduce volatility. More importantly, it strengthens the overall operating environment.
That matters because if the long-term goal is recap and release, you want these businesses looking as stable, profitable, and scalable as possible before asking private capital to fully buy into the story.
The government stake and warrants are obviously still the biggest wildcard, and reasonable people can disagree on how that ultimately gets handled. But it’s hard to ignore that the government has a massive financial incentive tied to its position here, and that likely plays a huge role in how all of this eventually unfolds.
For me, the biggest takeaway is pretty simple: this increasingly looks like a build value first, monetize later strategy.
And if that’s actually what’s happening, then this could be a lot bigger than most of us originally thought.
I’ve been all over Bill Pulte on X and I’ve been highly critical. I’m not apologizing — I’ve been on this ride a lot longer than he has — but I am starting to see that -MAYBE- there is a bigger picture.
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