Ackman Pushes Trump to Retire $370B Fannie/Freddie Claim

Ackman Lobbies White House to Forgive $370B Government Stake

Hedge fund manager Bill Ackman has directly engaged senior Trump administration officials with a plan to resolve the long-standing government control of Fannie Mae and Freddie Mac. In a series of meetings with officials including National Economic Council Director Kevin Hassett, Ackman proposed that the U.S. government retire its $370 billion senior preferred stock claim on the two mortgage-finance firms. This claim stems from the nearly $200 billion bailout provided during the 2008 financial crisis.

Ackman's core argument is that the government has already been more than repaid, having collected over $300 billion in dividends from the two entities since the takeover. His plan also calls for the government to exercise its warrants to acquire nearly 80% of the companies' common stock and relist the shares on the New York Stock Exchange, paving the way for a carefully planned exit from conservatorship.

Shareholder Uncertainty Triggers 30% Plunge in GSE Stocks

The lack of a clear privatization path has left investors in a precarious position, fueling significant stock price declines. Shares of both Fannie Mae and Freddie Mac, which trade over-the-counter, have lost approximately 30% of their value in the past week. During recent trading, Fannie's shares plummeted as much as 22% intraday, while Freddie's shed up to 16%, reflecting deep investor impatience.

For major shareholders like Ackman's Pershing Square, which owns over 10% of the common shares, the outcome is critical. A favorable decision could generate hundreds of billions of dollars in returns. However, the risks are acute; an alternative plan where the government converts its preferred shares to common stock would severely dilute existing shareholders, potentially wiping out their investment.

Presidential Decision Remains Key Obstacle to Privatization

Despite the detailed proposal, the future of Fannie and Freddie rests entirely on a decision by President Trump. While Ackman argues his plan would not impact mortgage rates, the administration has not committed to a course of action and has previously floated multiple possibilities without providing a detailed structure. Analysts warn that without clarity, the stocks could face a "total unwind."

For now, the administration's focus on other economic and geopolitical issues leaves the mortgage giants in purgatory. A bet on Fannie and Freddie shares remains a high-stakes gamble on a political resolution that has been unresolved for nearly two decades.