First big decision by Donald Trump on economy: The President-elect will privatise US' two largest government-owned lenders Fannie Mae and Freddie Mac, says Bill Ackman

In the second term, Donald Trump's administration may change the status quo of the U.S. economy by privatizing two of the largest government-owned mortgage companies, Fannie Mae and Freddie Mac. This risky step was emphasized by hedge fund tycoon and Trump backer Bill Ackman, who posted his thoughts in a recent post on X (formerly Twitter). Ackman is of the view that privatization would relieve the conservatorship of these creditors and, in doing so, may bring about substantial financial benefits to the federal government.

Bill Ackman estimates that, privatizing Fannie Mae and Freddie Mac, will provide additional federal profit of $300 billion. The corporations supporting a large share of U.S. mortgages were put under receivership after the 2008 housing collapse. Claiming that the previous team led under Trump's first term, Ackman argues that the new team is ready for this in 2 years.

Ackman highlighted Trump's penchant for disruptive transactions, saying, "Trump is a big deal guy, and this would be the biggest deal the world has ever seen. I am confident he will get it done.”


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In the aftermath of Ackman's comments, both companies' stock prices experienced significant gains, Fannie Mae rising 18.4% and Freddie Mac rising 18%.

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Ackman further commended Trump's economic approaches, including the deployment of tariffs to point at the immigration and the drug trafficking issues with Mexico and Canada. He described this strategy as one of the core of Trump's "America First" policy.

Although the privatization scheme offers a window of opportunity, Ackman conceded a "high level of uncertainty" in respect of the final result.

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FAQs:

Did Trump try this during his first term?
Yes, former Treasury Secretary Steven Mnuchin began steps toward privatization but ran out of time to complete the process.

What are Fannie Mae and Freddie Mac?
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are government-owned companies that support most US home loans.