Wall Street and Washington DC reign as confusion as the Trump administration will eliminate the potential public bid by Fannie Mae and Freddie Mac this year.
Trump’s administration caused the idea of selling government shares in two giants. It will be a step that would be the biggest in the history of the IPO, taking into account the current values. The exact mechanics of such an agreement must be clarified.
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The plans to discuss the administration first reported by The Wall Street Journal, with 5 to 15% of Fannie and Freddie shares, with a total estimate of $ 500 billion or higher. However, to attract investors, analysts and housing experts see some problems that need to be solved along the way.
Meanwhile, President Trump is still considering all his potential. This means that plans can change. In recent weeks, he has met with CEO for some of the largest Wall Street banks, including Jamie Dimon, Jpmorgan Chase, Bank of America Brian Moynihan and Citigroup, a representative of Jane Fraser to discuss the mortgage giants.
Last weekend, he added more fuel to the idea of the IPO, sharing a drooling image in which he himself called the New York Stock Exchange “Social”.
Fannie and Freddie Advisor: JPMorgan Chase CEO, Jamie Dimon in New York. (Noam Ends/Getty Images Photo) ·Images of Noam Ends Vitty
There is neither Fannie “nor Freddie in the image of Trump, and instead, one entity called the” Great American Mortgage Corporation “was included in the Maga List.
So far, the government’s plan to launch a public proposal of the mortgage giants has been left by analysts and housing experts a bit perplexed. Some doubt as to whether such a large and sophisticated stock offer can be made by 2025. The end of the end.
“In order to reach this time zone, Trump’s administration will have to move very quickly through very weeds and fundamental political discussions,” said JEB Mason, a former Bush White House and Treasury official.
Fannie Mae and Freddie Mac, also known as the Federal National Mortgage Association (FNMA) and the Federal Housing Loan Loan Corporation (FMCC), play a key role in the US housing market, buying mortgages, then packing and selling them as bonds for investors.
2008 During the financial crisis, both belonged to the Government Conservatoire when the extent of the mortgage obligations increased. Discarded two government control firms was a long and hotly debated thing.
Some famous Wall Street investors, including billionaire Bill Ackman and John Paulson, allowed their betting many years ago to acquire general and desired shares in Fannie and Freddie, hoping that the Conservatoire of both companies will eventually end.
The first Trump administration sought to do so, even hiring Morgan Stanley and Jpmorgan Chase. After all, it could not do the job.
Such policy debates revolve around the potential benefits of reducing the role of the federal government in giants in the risk of disrupting the housing market.
“It may also be that they will try to organize a market offer without answering all the most important questions,” Mason added.
For sale? Fannie Mae headquarters in Washington. (AP photo/Manuel Balce Ceeta, File) ·Associated Press
For potential IPO investors, the most important issues are whether the mortgage giants can promise a certain degree of shareholders’ rights and compare the stable profit level.
According to KBW analyst Bose George, the administration has at least two main problems to meet these assurances.
In exchange for saving the mortgage giants more than a decade ago, the Treasury Department has a large share of Fannie and Freddie Senior Preferred shares, which is currently valued at more than $ 340 billion.
The usual thinking is that the Federal Agency must either dissolve or convert its shares into simple promotions. Both options make possible claims by taxpayers or existing shareholders.
“This can be a very uncomfortable start of the IPO, especially given this idea that there may be plenty of litigation,” George said.
Another problem is that the mortgage giants face the gap of $ 181 billion that may require damages that they must delay if the downturn. Not only will this minimum requirement take a better part of the decade, but it will drastically take away the return of each giant to the point that “no one will buy shares,” George said.
But probably the biggest problem is that Trump’s administration is too much for investors.
There are also “all-risk housing system and home ownership if you are too stunning the administration that is too inclined to do Fannie and Freddie too attractive to investors,” said Jim Parrott, a former Obama administration housing advisor.
Trump’s administration has so far also avoided how it plans to ensure the mass perception that the government will hit these firms during the crisis.
This guarantee allows Fannie and Freddie to buy a mortgage, pack them as bonds and sell them to investors in a lower credit rating. It remains a hot debate on whether the administration will need to take further action to prevent this guarantee.
If Fannie, Freddie and Government and Government have changed status that does not resolve certain issues, “many Americans may accidentally encounter higher mortgage rates,” said PIMCO Public Policy Manager Libby Canrill this week in a statement to clients.
Christopher Whalen, Chairman of the Khalen Global Advisors, a advisory company that focuses on mortgage funding and banking, said: “There is a huge communication task that must take place for the home complex, brokers, home builders, lenders, banks, all.”
David Hollerith is a senior journalist at the Yahoo Finance, including banking, cryptocurrency and other financial areas.
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