Swordsmyth
05-30-2019, 10:54 PM
The Trump administration is in the nascent stages planning what people inside the government say could be history’s largest public offering as it looks to release the mortgage agencies Fannie Mae and Freddie Mac from government control, FOX Business Network has learned.
The size of the public offering could easily exceed $100 billion, Trump administration officials concede, and it largely depends on the size and scope of the mortgage outfits’ mandate when the government finally releases them from government-controlled “conservatorship,” which was imposed on the agencies during the 2008 financial crisis.
In recent weeks, Wall Street bankers have spoken with Trump administration officials informally on the broad outlines of the stock deal that will finance the final leg of Fannie and Freddie’s recapitalization plan, according to financial executives and administration officials with knowledge of the matter. They described the possible stock sale as something of a hybrid between a traditional initial public offering and a secondary offering of stock, or a “re-IPO” since both agencies already have outstanding shares even if the stock sales will amount to a watershed moment in their post-conservatorship existence.
Government officials are eying the offering for some time in 2020, and they say the exact size, timing, and even likelihood are all in flux given the complexity of the reform effort that begins with gaining consensus from the various factions within the Trump administration on a framework for the future of Fannie Mae and Freddie Mac.
FOX Business’ Jennifer Schonberger previously reported (https://www.foxbusiness.com/markets/fannie-freddie-ipo-could-come-in-2020-fhfa-mark-calabria) the new Federal Housing and Finance Agency chief Mark Calabria was considering an IPO for Fannie and Freddie.
At the moment, the Treasury Department is working out a plan that will describe the scope of the agency’s future. But that won’t be the final word. Calabria also has a major say in the future of the agencies—known as government-sponsored enterprises or GSEs—as do economic officials in the Trump administration, such as National Economic Council chief Larry Kudlow.
Kudlow and Calabria believe the GSEs should reduce their footprint in the mortgage markets and guarantee fewer loans, while those that they do guarantee should be of higher quality, according to people familiar with their thinking. At their height, the agencies insured about 40 percent of all long-term home mortgages by purchasing loans off the balance sheets of banks and packaging them into mortgage securities so the banks could do additional lending and prop up the housing market.
But such practices led to the mortgage crisis, the GSEs’ meltdown and a $187 billion taxpayer bailout at the start of the 2008 financial crisis, something Calabria and Kudlow want to avoid. As a result, both officials are also in favor of having the GSEs hold more capital. They have called for the creation of competitors in the mortgage business.
More at: https://finance.yahoo.com/news/trump-administration-early-stages-possible-224947468.html
The size of the public offering could easily exceed $100 billion, Trump administration officials concede, and it largely depends on the size and scope of the mortgage outfits’ mandate when the government finally releases them from government-controlled “conservatorship,” which was imposed on the agencies during the 2008 financial crisis.
In recent weeks, Wall Street bankers have spoken with Trump administration officials informally on the broad outlines of the stock deal that will finance the final leg of Fannie and Freddie’s recapitalization plan, according to financial executives and administration officials with knowledge of the matter. They described the possible stock sale as something of a hybrid between a traditional initial public offering and a secondary offering of stock, or a “re-IPO” since both agencies already have outstanding shares even if the stock sales will amount to a watershed moment in their post-conservatorship existence.
Government officials are eying the offering for some time in 2020, and they say the exact size, timing, and even likelihood are all in flux given the complexity of the reform effort that begins with gaining consensus from the various factions within the Trump administration on a framework for the future of Fannie Mae and Freddie Mac.
FOX Business’ Jennifer Schonberger previously reported (https://www.foxbusiness.com/markets/fannie-freddie-ipo-could-come-in-2020-fhfa-mark-calabria) the new Federal Housing and Finance Agency chief Mark Calabria was considering an IPO for Fannie and Freddie.
At the moment, the Treasury Department is working out a plan that will describe the scope of the agency’s future. But that won’t be the final word. Calabria also has a major say in the future of the agencies—known as government-sponsored enterprises or GSEs—as do economic officials in the Trump administration, such as National Economic Council chief Larry Kudlow.
Kudlow and Calabria believe the GSEs should reduce their footprint in the mortgage markets and guarantee fewer loans, while those that they do guarantee should be of higher quality, according to people familiar with their thinking. At their height, the agencies insured about 40 percent of all long-term home mortgages by purchasing loans off the balance sheets of banks and packaging them into mortgage securities so the banks could do additional lending and prop up the housing market.
But such practices led to the mortgage crisis, the GSEs’ meltdown and a $187 billion taxpayer bailout at the start of the 2008 financial crisis, something Calabria and Kudlow want to avoid. As a result, both officials are also in favor of having the GSEs hold more capital. They have called for the creation of competitors in the mortgage business.
More at: https://finance.yahoo.com/news/trump-administration-early-stages-possible-224947468.html