Munchin is making Fannie Mae and Freddie Mac shareholders great again. Shares of (Fannie Mae OTCMKTS: FNMA) are currently up 34 percent today, while Freddie Mac shares are clocking in 32 percent gains (OTCMKTS: FMCC)at the time of this writing. And that is not all both stocks are up about 200% since Donald Trump won the election on November 8th 2016. No wonder Bill Ackman and Bruce Berkowitz are so excited about the Trump admin. The two large shareholders expect a revamp of housing policy which could be extremely lucrative to the shareholders. Munchin is very close with Eddie Lampert and is also connected (through that medium?) to Bruce Berkowitz.
But catalyst for today’s rally – Steve Munchin saying on Fox Business Network that the GSEs should not be under Government control. Below is a rough transcript via QTR
Rough Transcription of Mnuchin’s Fox Appearance
Maria: Would you move to have these privatized?
Mnuchin: Absolutely. We gotta get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have. In many cases this displaces private lending in the mortgage markets and we need these entities that will be safe; so let me just be clear we’ll make sure that when they’re restructured they’re absolutely safe and they don’t get taken over again but we gotta get them out of government control.
Maria: This is a big deal. These are huge institutions. You think that. If we saw that as not complicated wouldn’t that have happened already? That it would get out of government?
Mnuchin: Well I think with this administration (Obama) it hasn’t been a priority. If it had been a priority it would have. And in our administration its right up there in the list of the top 10 things that we’re going to get done and we’ll get it done reasonably fast.
See the full interview below.
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Fannie Mae and Freddie Mac Should Exit Government Grip, Mnuchin
By Joe Light, Bloomberg
Steven Mnuchin, president-elect Donald Trump’s nominee to be U.S. Treasury Secretary, said Fannie Mae and Freddie Mac should leave government control and that the incoming administration “will get it done reasonably fast.”
Mnuchin in the interview said that government ownership of the companies displaces private mortgage lending.
“We will make sure that when they are restructured, they are absolutely safe and don’t get taken over again. But we’ve got to get them out of government control,” Mnuchin said.
Fannie Mae and Freddie Mac, which are also referred to as the “government-sponsored enterprises” don’t make mortgages. They buy them from lenders, wrap them into securities and provide guarantees to investors in case of default. That process underpins the U.S. mortgage system and is largely responsible for making inexpensive 30-year fixed-rate loans widely available.
The government took Fannie Mae and Freddie Mac over during the 2008 financial crisis, but left private shares of the companies outstanding. Their current bailout agreements require that they send nearly all of their profits to the Treasury, while winding down their capital to zero dollars by 2018.
Read the full article here.