The Trump administration shouldn’t merge mortgage giants Fannie Mae and Freddie Mac into a single company or try to sell a portion of the government’s stake in the companies in a public offering this year, billionaire investor Bill Ackman said Tuesday in a closely watched presentation.
Ackman’s Pershing Square Capital Management is the biggest private holder in the companies, having scooped up millions of shares after they were placed in government conservatorship in 2008.
He and other private holders of Fannie and Freddie stock, which continues to trade on the over-the-counter market, could make big profits — or be largely wiped out — depending on what path the government takes to reprivatize the companies.
Fannie Mae and Freddie Mac reported combined third-quarter profits of $6.7 billion, increasing their net worth to $173 billion as they prepare for a potential public offering.
Bill Pulte, the head of Fannie and Freddie’s federal regulator, said last month that the Trump administration plans to raise $25 billion to $30 billion by selling about 5 percent of the companies’ shares in a public offering as early as December — but more likely in the first half of 2026.
The Trump administration has said a key goal of its plans for Fannie and Freddie is to keep mortgage rates stable — which could mean keeping the companies in conservatorship, with the government providing an implicit guarantee of their obligations.
In a presentation on the social media platform X, Ackman said stock market investors are not going to be interested in buying shares in Fannie and Freddie while they’re still in government conservatorship.
“Institutions and retail investors were burned by both the 2008 bailout and the 2012 net worth sweep, in which Fannie and Freddie’s profits were paid to the Treasury,” Ackman said.
The Treasury Department put an end to the net worth sweeps during Trump’s first term as president. But as long as Fannie and Freddie are in conservatorship, the companies’ boards of directors continue to owe fiduciary duties to the government, not shareholders, Ackman said.
“Attempting a large secondary offering now would at best dilute taxpayer ownership at a significant discount to long-term fair value, or more likely result in a failed offering,” Ackman said in his presentation.
But Ackman proposed an alternative plan that would allow President Trump to save face by converting the government’s warrants into common stock at .00001 cents per share, and relisting the companies on the New York Stock Exchange.
That plan, which would also require the government to acknowledge that Fannie and Freddie have repaid their taxpayer bailout, would leave taxpayers owning a 79.9 percent stake in the companies worth over $300 billion, he claimed.
Although there would be no immediate payout for the government, “a New York Stock Exchange listing would allow institutional investors to build positions in Fannie and Freddie and provides the ideal setup for future secondary sales by Treasury when desired,” Ackman said in his presentation.
The Trump administration would then have 3 years “to carefully plan an exit from conservatorship” that addresses ongoing government support, a regulatory framework, and management and governance of Fannie and Freddie.
“What we’re proposing here is actually not an IPO,” Ackman said in a Q&A session. “Fannie and Freddie are already public companies. An IPO is an initial public offering.”
“What the government’s been talking about is actually a secondary sale of a portion of their interest in the two enterprises in connection with a listing of the companies back on the New York Stock Exchange,” he said. “What we’re suggesting is now is not the right time to sell.”
Fannie and Freddie “are growing in value in a very significant way. There are significant opportunities for optimization, for better management of these enterprises. A lot needs to be done to remove uncertainty. By taking this, if you will, almost a baby step … what this will do is create a lot of visibility around the company. It will eliminate the fear of [private investors of the government’s preferred shares] being converted, and it will open the market for Fannie and Freddie stock to a much broader group of investors.”
In August, Trump posted a meme to Truth Social suggesting that Fannie and Freddie could be merged into a single company, “The Great American Mortgage Corporation,” and listed on the New York Stock Exchange by November.
“Relisting allows President Trump to deliver on his November 2025 timing commitment,” Ackman said in his presentation.
But in the Q&A session, Ackman said that competition between Fannie and Freddie is healthy and should be preserved.
“I think the participants in the mortgage market don’t want to deal with a monopoly,” Ackman said. “The banks that are selling their mortgages to Fannie and Freddie want a responsive person on the other side of the phone, if you will. And I think the benefits of potential cost savings [through a merger] are not so significant.”
Ackman suggested that it might have been a mistake to assume that President Trump supports merging the companies.
“I think perhaps we may have misinterpreted the President’s meme where he talked about the ‘Great American Mortgage Corporation,'” Ackman said. “He just left the ‘S’ out of ‘Great American Mortgage Corporations.'”
One potential advantage of Ackman’s plan to the Trump administration is that it doesn’t require Congressional buy-in to get it rolling. Democrats have complained that they’ve been shut out of the discussion over reprivatizing Fannie and Freddie and want more details of how it could impact mortgage rates and the economy.
Accounting for Fannie and Freddie’s repayment of senior preferred stock “can be accomplished via a simple letter agreement between Treasury and FHFA,” Ackman said in his presentation, referring to the mortgage giants’ regulator, the Federal Housing Finance Agency.
Based on company filings, Pershing Square estimates Fannie and Freddie have repaid their $193 billion taxpayer bailout, plus interest. All told, the mortgage giants paid $301 billion to the government, or $25 billion more than the $276 billion owed with interest.
Ackman’s session drew considerable interest on X, with the Q&A attracting 90,000 visitors — many of whom are Fannie and Freddie shareholders.
But Ackman said he’s also made his pitch directly to Trump, Pulte and Treasury Secretary Scott Bessent in separate meetings over the past 10 days.
In the long run, there’s sure to be more debate over the finer points of how privatization would work — and whether that would even the best course of action.
Both the National Association of Realtors and the Mortgage Bankers Association have proposed a “utility-style” model for Fannie and Freddie, in which the government would provide an explicit guarantee to MBS investors, while limiting the companies’ risks and profits.
Americans for Financial Reform — a nonpartisan coalition of civil rights, labor and consumer groups — has warned that rushing into privatization could raise housing costs and jeopardize the economy.
“While the upside for investors like Bill Ackman is clear, a Trump-led release of Fannie and Freddie would represent a terrible deal for the public, who would cede control to shareholders while receiving higher housing costs as our absurd reward,” the group said in October. “In the midst of an unprecedented cost-of-living crisis and rising economic uncertainty … privatization would increase housing costs both for homebuyers and renters.”
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
