Could the largest IPO in history be on the horizon? President Donald Trump and his economic team are crafting a bold plan to sell up to 15% of shares in Fannie Mae and Freddie Mac, the government-controlled mortgage behemoths.
According to CNN, this potential $30 billion stock sale aims to privatize these entities, marking a seismic shift from their current status under government conservatorship.
Let’s rewind to the origins of this saga. Fannie Mae and Freddie Mac, critical players in America’s housing market, guarantee 70% of U.S. mortgages. They don’t issue loans directly but buy them from lenders and repackage them for investors, keeping the housing market liquid.
Back on September 7, 2008, during the housing collapse that sparked the Great Recession, both companies were placed under government control. Facing massive losses from plummeting home values, this conservatorship was meant to be temporary to ensure their survival.
Just a week later, on September 14, 2008, the collapse of Lehman Brothers intensified the global financial crisis. Fannie and Freddie’s government backing became a lifeline amid the chaos.
For years, many in the Republican Party, alongside Trump, have pushed to end this federal oversight. They argue these firms can stand on their own, and privatization could raise significant funds for a debt-laden government.
Trump’s interest in privatizing these mortgage giants isn’t new. During his first term, he attempted to return them to public status but failed to seal the deal.
Now, in his second term, he’s reigniting the effort with renewed vigor. Recently, he’s met with top Wall Street executives like JPMorgan’s Jamie Dimon, Goldman Sachs’ David Solomon, and Bank of America’s Brian Moynihan to discuss a potential IPO.
In a Truth Social post in May, Trump signaled his intent, stating he’s giving “very serious consideration” to this move. He added that a decision could come “in the near future” after consulting with cabinet members.
The White House estimates that selling 15% of shares could generate a staggering $30 billion. If realized, this could mark the largest IPO ever recorded.
But here’s the rub: Privatization isn’t without controversy. Some economists caution that it could destabilize the mortgage market, potentially raising borrowing costs for homeowners. Mark Zandi of Moody’s Analytics warned in 2024 that this shift might cost the average American with a new mortgage an extra $1,800 to $2,800 annually. That’s a hefty price for the pursuit of privatization.
Critics also highlight a troubling angle: much of the IPO proceeds could line the pockets of hedge fund investors already backing Fannie and Freddie. Taxpayers might see little direct benefit from this windfall.
For investors and homeowners, the stakes are high. While a return to pre-2008 public status—backed by the U.S. Treasury—could signal market confidence, the risks of higher mortgage rates loom large. So, what’s the smart play? Keep a close eye on housing market trends and consider locking in rates if you’re in the market for a home.
As plans remain unfinalized, per a senior administration official, Trump continues to weigh options. This historic IPO could reshape America’s housing landscape, for better or worse. Stay tuned—and stay informed—as this story unfolds.