Some of the biggest names in finance are warning that the government’s plan to return Fannie Mae and Freddie Mac to private ownership risks disrupting a market critical to the U.S. housing system, the Wall Street Journal reported. The investors, including BlackRock Inc., Fidelity Investments and Pacific Investment Management Co., have told the Trump administration that any move to privatize Fannie and Freddie should include an explicit guarantee of the $5 trillion in mortgage-backed securities they issue, which only Congress can provide. The Trump administration, by contrast, says that it is willing to move forward without such a guarantee, arguing that it is past time for the government to reduce its role in housing. To prevent a collapse of the mortgage-finance giants during the 2008 financial crisis, the U.S. government agreed to absorb unlimited losses at the companies and ultimately provided nearly $190 billion in taxpayer money. Eleven years later, the Trump administration has outlined plans to put the companies back into private hands—and the way in which taxpayers could be on the hook to bail out the institutions has emerged as a stumbling block.
