The Trump administration is preparing to release as early as the first part of September its long-awaited plan to return Fannie Mae and Freddie Mac to private-shareholder ownership, the Wall Street Journal reported. The proposal comes more than a decade after the government seized the mortgage-finance firms to save them from collapse. It would likely seek to put the companies on a sounder financial footing and then release them from government control if Congress doesn’t enact a more fundamental overhaul in the meantime. The plan, which could be floated shortly after the Labor Day holiday, is expected to envision a version of what has been called “recap and release,” which would ensure the firms have adequate capital to absorb loan losses in a future housing slump. Its provisions aren’t expected to give details for initial public offerings for the firms. If the proposal is carried out, the firms could ultimately return to the way they operated before the financial crisis. While administration officials would prefer that Congress act on a more sweeping overhaul of housing finance, Republican control of the Senate and Democratic control of the House leaves lawmakers unlikely to act. The firms are unlikely to face new competition because only Congress can create a more-level playing field that could break up the firms’ effective duopoly.
