By Medha Singh
(Reuters) -Over-the-counter (OTC) shares of Fannie Mae (OTC: FNMA ) and Freddie Mac (OTC: FMCC ) rose on Wednesday after U.S. President Donald Trump said he was working on taking the housing giants public.
"I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President," Trump wrote in a post on Truth Social late on Tuesday.
The Trump administration wants to end the long-standing conservatorship of Fannie Mae and Freddie Mac, which have been under the U.S. government’s control since 2008 after they suffered heavy losses during the subprime mortgage crisis.
Trump had tried to reduce government control during his first term.
At a Fannie Mae news conference, Bill Pulte, director of the Federal Housing Finance Agency that regulates Fannie Mae and Freddie Mac, said Trump is talking about "potentially figuring out how these businesses can continue to be worth more and more money over time."
"These businesses, in my view are worth - eventually, will be worth - trillions of dollars worth of value to the American taxpayers," he said.
Asked about details of the plan on taking the companies public, Pulte said it’s up to Trump and he would "eventually make whatever decision that he wants to make, on his own timeline."
The regulator is expected to play a central role in any effort to return the pair, which backs the majority of the nation’s residential mortgages, to the private sector.
Fannie shares rose 3.7% to $10.92, while Freddie gained 7% to $8.13 by midday trading after a double-digit jump earlier in the session. The shares, which don’t trade on major exchanges, hit their highest since 2008 after Trump said last week he was mulling a spinoff of the U.S. mortgage finance firms.
The United States Treasury owns preferred shares in the firms and warrants to purchase about 80% of their common stock.
The combined market value of the two companies was $17 billion as of the last closing price. They have shot up more than five-fold in value over the past year, with most gains made around Trump’s 2024 U.S. election win.
Trump ally Bill Ackman’s Pershing Square Capital Management is the biggest holder of Fannie’s public OTC shares with about 10%, according to LSEG data. Capital Research Global Investors, a unit of the Capital Group, is among the top investors in Freddie and Fannie.
Fannie Mae announced an AI fraud detection technology partnership with Palantir (NASDAQ: PLTR ) on Wednesday and said it was in talks with Elon Musk-owned xAI as well.
The mortgage fraud detection software will be trained on Fannie Mae data, and Palantir will comply with the company’s controls, Fannie Mae CEO Priscilla Almodovar said.