Fannie and Freddie can get a great salary if they go to the public, hedging funds. A specialist wants ‘utility model’ for Fortune 500 giants

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• President Donald Trump has long been asked reprimand Fannie mae and Freddie MacDuring the global financial crisis, the $ 191 billion collateral is necessary, the government is under the control of the government. Wharton is the best model for fishing and real estate professor Susan Wachter, heavy regulation of utilities and insurance carriers Mortgage giants.

Fortune has no 500 members The increase in stocks Last year, Fannie Mae and Freddie made it like Mac. After the global financial crisis, the hedge funds that receive a nearly worthless share in mortgage giants can work billions if the President fulfills Donald Trump Its purpose to take the public of both companies.

Note how to release several specialists from Fannie and Freddie at this time Government control without repeating fault 2008 caused him to melt.

Uncle Sam whole Both state-funded enterprises provide important liquidity in the threshold of both bankruptcy and to housing markets. In 2010, after the site of the New York Stock Exchange, the shares continued to trade on the meter.

Billionaire Hedging Foundation owners Bill Ackman and John Paulson, among those who closes them, betting The US government would eventually be good with the collateral to contribute both organizations. With Trump rise The issue on the social media platform last month did not notice that they supported the president of both men.

“The lower part of the media stories (Trump) contains many supporters (Fannie and Freddie) shareholders looking for a gift from the president” Ackman write In a long post X last week. “There can be nothing but the truth.”

Paulson did not respond to a request for comment.

‘Useful Model’ for Fannie and Freddie

Director General of the Hedge Foundation Ackman, Square Persher CEO, said that the government can reward taxpayers while maintaining the existence and favorability of the government’s conservatism.

One-time Thorny issues In history, the largest public victims should be sorted before they can be sorted out, many specialists warn. Aside from these disputes, the largest players in American mortgage markets have more questions about how private companies work.

For Susan Wachter, a real estate and financial professor at the University of Wharton School of Pennsylvania, a multi-adjustable model for utilities – government agencies decided how many consumers can get in. In addition, the regulators also see parallels to the insurance industry that protects prices on the reserves of preventing the risk of risks.

“Helps insure against another ancillary,” he said Fortune“And it helps to save a profit in a long time.”

Fannie and Freddie supports 70% of America’s mortgage market, according to By liberating the initiators to receive more loans by receiving mortgage loans from creditors and joining mortgage-supported securities. The borrowers provide payments on these securities, when filling in a prize to ensure this insurance.

There are many explanations for this Apartment Bubble Pray for the balance sheets of Fannie and Freddie. The main problem, Wachter, when housing prices in 2008, when there is about 20% tank, there was a large number of credit Fannie and Freddie insurance “underwater“This package has fallen below the amount of debt debts, which is the cost of houses.

As they competed for Business, Fannie and Freddie did not collect enough payments to accept this risse.

“When these institutions are uncontrolled, there is a race on the bottom,” he said.

Both institutions have also started a problem with a large amount of risky, special labeled mortgage supported by a special labeled mortgage to catch. Thanks to the belief between the so-called “hidden guarantee” or investors, they have financed cheap borrowers, which proved the government’s failure to fail.

In short, Fannie and Freddie’s both earned a profit “affect“Being a very commentator called the world’s largest hedge funds, helped to subsidize the valid government. Taxpayers paid these bets on risky assets.

A way forward

Wachter believes that the reforms established within the Conservatism are more solid in promoting Fannie and Freddie to promote the average homeowner.

The first days of the Covid-19 pandemology provided a great test, which is a short participant in the fear of the massacre of unemployment.

“Fannie and Freddie can continue, can continue to loan,” said Wachter, co-chair of the Penn City Research Institute, “those who responded to debt recipients.”

Both enterprises remain the center for an armature of American imagery: 30 years, a fixed grade, inefficient mortgage. Of course, a certain question is whether the new transaction period is still resistant to the value of the invention of the period.

Trump last month gossip The US government will continue to “continue secret guarantees,” the exact desires. Like personal firms, Federally Federally Back Frannie and Freddie’s continuation of the 2008 repeated repeat. Put them completely self and Mortgage rates likely go higher Investors require compensation to take more risk while receiving package loans from enterprises.

“However, I think that this debate is supported by the government, despite the support of these giants, will limit the private market and private competition,” – Amit Seru, Stanford graduate school financial professor Fortune. “And this means a lot of innovative products.”

For example, the pandemic boom of the US housing market eventually stoppedFor partial dubbes, “be locked up“If the existing homeowners who have purchased in the beginning of mortgage rates, in 2022, when there is a federal reserve Dramatically walking Debt costs have not wanted to sell and copy a new mortgage in higher proportions of inflation.

In many European countries, Seru said that the problem is less thanks to the product that allows people to sell their homes and take the existing mortgage with themselves. This is not possible in the United States in general, because he said, because Fannie and Freddie’s dominants could not move far from the industry standard.

“No one can compete with the government,” Seru said, Seru, a sample, conservative reservoir.

Meanwhile, Ackman sees Fannie and Freddie left in the nucleus of the American mortgage market. To facilitate a mass proposal, Ackman proposed to cancel a large part of the treasury worth about $ 350 billion and will forgive dividends. This will produce a massive obligation from the balance sheets of enterprises, making it more attractive to private investors.

But the government would not want to delete. Separately from preferred stocks, this is also warranty This gives you the right to receive about a quarter of a four-quarter of Fannie and Freddie, one hundred hundred or 0.00001 for a share of 0.00001 for a share. Fannie Stock currently trades for about $ 9 and Freddie is around $ 7.

If Washington cancels all the large steps, the value of warrants will increase by about $ 280 billion.

Fannie and Freddie’s largest share of the largest share of Feddie would be diluted with the total reserves without the treasury without the treasury, almost zero, almost zero.

“(Fannie and Freddie) There are no hands on shareholders,” Ackman wrote in a social media post last week. “On the contrary. (Hundreds of billion dollars in Fannie and Freddie) were unilaterally taken by the government, and companies never received a loan for these payments.”

The US government has at least collected $ 301 billion In earnings from Fannie and Freddie, in 2008 he won the mortgage giants about $ 191 billion. Ackman says His plan Sam can lead to a paid for a similar size for uncle.

Wacter and Seru are definitely not satisfied. However, as a result, they see their choices as a sideshow in relation to the bigger questions of the government, Fannie and Freddie to appear as private enterprises.

“There’s a lot here,” Seru said: “I think it is going well outside Ackman’s investments.”

This story was first displayed Fortune.com

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