Pershing Square Capital Management LP Chief Executive Officer Bill Ackman (center) during the company’s initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) on Wednesday, April 29, 2026 in New York, USA.
Michael Nagle | Bloomberg | Getty Images
The midterm elections could be a turning point in the presidential race. fannie mae and freddie mac Billionaire investor Bill Ackman says it is free from government control.
If the gains in both stocks are any indication, investors might agree with him.
The Federal Home Mortgage Corporation, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation (Freddie Mac) each soared more than 60% from Oct. 14 to Monday’s close. Both stocks rose about 3% on Tuesday.
Mr. Ackman, the founder of Pershing Square Capital Management, has long advocated for both companies to be released from federal conservatorship.
“The reason it’s not mentioned right now is because, as you know, it’s the midterm elections,” he said in an interview with CNBC’s “Squawk Box.”
Federal Home Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) last month.
Mr. Ackman, who owns the names of both companies through Pershing Square, said in a quarterly letter to shareholders issued Monday that he believes Freddie and Fannie have the potential to appreciate “10 times the current stock price.”
Fannie and Freddie buy mortgages from banks and other lenders and package them into mortgage-backed securities known as MBS. Their operations are critical to the housing market, providing liquidity to banks and creating a secondary market for MBS.
These companies were placed into conservatorship in September 2008 during the financial crisis. These shares were delisted from the New York Stock Exchange in 2010 and have been traded over-the-counter ever since.
Ackman wants the conservatorship to end, arguing that these companies would be worth many times their current valuations if freed from government control.
President Donald Trump supports ending Fannie and Freddie’s conservatorship. However, political and economic controversy remains.
These entities operate under strict capital standards requirements and require recapitalization, which may occur through the issuance of common stock. However, the Treasury Department will need to develop an exit plan for approximately $388 billion of corporate ownership through preferred securities and stock options.
Congress may also need to play a role, including by passing legislation that restructures the government’s role in mortgage lending and mortgage guarantees.
Nevertheless, Treasury Secretary Scott Bessent recently said it could happen before the end of President Trump’s term, telling 2Way’s podcast “The Morning Meeting” that the administration would work on the ownership structure “next year or the year after.” He said affordability will guide the decision.
One point of contention is whether ending Fannie and Freddie’s conservatorship would increase the spread of MBS over Treasuries, effectively making mortgages more expensive. Bessent has sought to reassure the market that that won’t happen.
“Whatever we do, the guiding principle will be to ensure that the spread on (agency) mortgages to the Treasury doesn’t widen,” Bessent said.
Ackman argues that privatizing the GSEs would protect them from political interference. “Fannie and Freddie are huge, hugely profitable institutions, and no matter which party controls them…if they’re still in the Conservative Party, they could influence the outcome of the election,” he told CNBC.
He explained that in one scenario, Democrats win the White House, conservatorship remains in place, and Democrats demand lower credit standards from Fannie and Freddie to expand homeownership and affordability.
“If they were to go more aggressively with low-credit borrowers, for example to achieve political objectives, they would have an impact on trillions of dollars of outstanding mortgage securities,” Ackman said. “That will impact overall credit spreads.”
MBS investors want certainty about how the entity is run, he noted.
“This problem will only be resolved in a world where they come out of conservatorship and become publicly traded companies owned by institutional and individual investors,” Ackman said. “We set the rules. In the guardianship system, the president can do whatever he wants.”
