Since spring, people around Donald Trump have been discussing how to end the conservatorship of the two government-sponsored enterprises — Fannie Mae and Freddie Mac — and return them to private control. Bill Ackman, chief executive of hedge fund Pershing Square, recently predicted that the conservatorship would end within the first two years of Trump’s second administration.
When Fannie Mae was turned into a private corporation, long after its inception as part of the New Deal in 1938, the change was meant to be permanent. Two years later, Congress created another private corporation, Freddie Mac. Again, the intent was, while under regulation, to remain private. But the U.S. real estate quakes during the global financial crisis shook the foundations of the two GSEs and, given the wide holdings in their bonds, there was a risk of massive financial impact.
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