Fannie Mae, Freddie Mac Shares Soar on Trump's Privatization Plans

Shares of mortgage giants Fannie Mae and Freddie Mac surged dramatically following President Donald Trump's announcement that he is giving "very serious consideration" to privatizing the two government-backed firms, which have been under government control since the 2008 financial crisis. This move has sparked investor optimism, pushing the companies' stock prices to their highest levels in over 16 years, with gains exceeding 30% in a single day. The proposed privatization could yield a significant windfall for the U.S. government, potentially exceeding $250 billion, and benefit major shareholders such as Bill Ackman. While the Trump administration and Treasury Secretary Scott Bessent have discussed plans including creating a sovereign wealth fund to manage government stakes, some analysts warn of potential downsides, including higher mortgage costs for homebuyers. Despite the recent stock price surge, several analysts maintain a cautious outlook, projecting a significant price correction for Fannie Mae shares in the coming year, with average price targets substantially below current levels. The contrasting perspectives highlight the uncertainty surrounding the future structure and valuation of these pivotal mortgage finance entities.