Trump Revives Plans to Privatize Fannie, Freddie Amid Market Concerns

President Donald Trump is actively pursuing the privatization of the government-sponsored enterprises Fannie Mae and Freddie Mac, which currently support about 70% of the U.S. mortgage market. His administration, under the Federal Housing Finance Agency Director Bill Pulte, has taken steps to restructure these entities, including significant leadership changes and operational cutbacks, aiming to reduce government conservatorship. While Trump claims the government would maintain an implicit guarantee to backstop these agencies during crises, experts and industry groups urge an explicit guarantee to protect taxpayers and borrowers. Critics warn that privatization could lead to higher mortgage rates and reduced liquidity in housing markets if not carefully managed, which might worsen the housing affordability crisis. Some analysts stress that the risks of ending conservatorship may outweigh the benefits given the firms' current profitability, while others argue that maintaining government control perpetuates systemic risks and advocate for the sale of the government's stake. The debate reflects deep concerns about balancing financial stability, market liquidity, and housing affordability amid efforts to reform these pivotal mortgage institutions.