President Trump’s new director of the Federal Housing Finance Agency says he’s considering an initial public offering of Fannie Mae and Freddie Mac as early as the first half of next year to raise capital.
In this FOX Business exclusive by Jennifer Schoenberger, and his first interview since taking the helm of the FHFA, Mark Calabria, says that allowing Fannie Mae and Freddie Mac to simply rebuild capital by retaining earnings isn’t enough to get the mortgage giants in a strong position quickly.
According to the article:
Right now, Fannie Mae and Freddie are under control of the federal government since being bailed out by taxpayers during the financial crisis. Both send all of their profits to the U.S. Treasury, in what’s called a net worth sweep, while maintaining a thin capital cushion of $3 billion. Calabria says a sufficient amount of capital is what’s needed to exit conservatorship or government control.
Calabria is currently waiting on a plan from the U.S. Treasury on reform for Fannie and Freddie, which he expects this summer. Then he will negotiate with Treasury and hopes to come to an agreement by the fall that would then allow them to stop Fannie and Freddie from sending all profits to Treasury later this year. That is, ending the so-called net sweep. By January, Calabria wants to start the capital-building process and thinks it’s possible an IPO could occur at the earliest in the first half of next year.