Trump Proposes Privatizing Fannie Mae and Freddie Mac to Boost Housing Market
President Donald Trump has proposed a plan to privatize mortgage giants Fannie Mae and Freddie Mac, aiming to end their government conservatorship. The move, which has sparked debate, could potentially lead to higher mortgage rates and increased taxpayer risks. Meanwhile, Trump has urged these entities to finance big homebuilders, who currently hold 2 million empty lots, to stimulate the housing market.
Trump's plan, unveiled to 'restore the American dream', involves working with big builders to construct new homes. He believes these companies, like the Organization of the Petroleum Exporting Countries (OPEC) in the oil market, are keeping housing prices high. In August, Trump met with top US bank executives, including Citi CEO Jane Fraser and BofA CEO Brian Moynihan, to discuss the privatization plans. Analysts expect a slower, more deliberative process due to the political sensitivity of mortgage rates. Privatizing Fannie Mae and Freddie Mac could make mortgages pricier and harder to obtain if they fully return to the private sector.
Trump's proposal to privatize Fannie Mae and Freddie Mac and use them to finance big homebuilders is a significant move in the housing market. While it aims to stimulate construction and boost the economy, it also raises concerns about potential increases in mortgage rates and taxpayer risks. The process is expected to be slower and more deliberate due to these sensitivities.
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