Why The Trump Administration’s MAGA Stock Dreams For Fannie And Freddie Could Be A Windfall For Wall Street

The Trump administration is teeing up what could be the biggest shakeup in U.S. housing finance since the 2008 crisis—a pair of IPOs that might value Fannie Mae and Freddie Mac at a combined $500 billion. The plan, which was first reported by The Wall Street Journal and is still being finalized by the administration, would see the federal government sell between 5% and 15% of each company, potentially raising about $30 billion in what would be one of the largest stock offerings in American history. Yet behind the fanfare lies a precarious gamble on institutions still tethered to taxpayer support and whose profitability is largely cushioned by an implicit government guarantee.

Senior administration officials have in recent days confirmed the plans are far along, though crucial structural decisions—such as whether to list the two separately or together—remain unresolved. President Trump himself has signaled his intention to proceed with the listings this year: “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES,” he wrote on social media last week. On Saturday, he posted an edited picture of himself ringing the opening bell at the NYSE for a hypothetical, combined entity called the Great American Mortgage Corporation trading under the ticker “MAGA.”

The Treasury—which currently holds the bulk of both government-sponsored enterprises (GSEs) equity—could release new shares, sell existing ones, or blend both strategies to create liquidity. Wall Street heavyweights such as JPMorgan, Goldman Sachs, Citigroup, and Bank of America have reportedly been asked to advise on pricing and structure.

The history of Fannie Mae and Freddie Mac is a cautionary tale. Fannie’s roots stretch back to 1938, Freddie’s to 1970; Both were designed to keep mortgage credit flowing by securitizing and guaranteeing home loans. Their business model—buying mortgages from lenders, bundling them into mortgage-backed securities and guaranteeing payment to investors—helped lower borrowing costs for generations of Americans. During the mid-2000s housing boom, both ramped up exposure to riskier loans and loosened underwriting standards, leaving them vulnerable when home prices crashed. During the housing bubble the top executives of these quasi-governmental agencies benefited from compensation packages in the tens of millions. By September 2008, the Federal Housing Finance Agency (FHFA) had placed them into conservatorship after a combined $187 billion Treasury rescue, wiping out most private shareholder value.

In the years since, the GSEs have returned to profitability, paying dividends that exceeded the bailout amount. Yet they have remained under government control, their retained earnings capped for much of the past decade until capital buffers were gradually rebuilt.