A new report by the “Wall Street Journal” reveals that discussions about privacy have been taking place since the spring and have included Trump confidants Larry Kudlow and John McEntee.
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Former members of the Trump administration and banking industry figures have been working on plans to free Fannie Mae and Freddie Mac from federal regulation, according to a report Friday. I The Wall Street Journal.
Talks on this issue have been going on since at least the spring, I Journal report. Unnamed sources in the report revealed that the talks involved Larry Kudlow and John McEntee, former director of the National Economic Council and former director of the White House presidential office, respectively. The report did not say who from the banking sector participated in the talks.
Fannie Mae and Freddie Mac went into receivership in 2008, as potential losses from subprime mortgage meltdowns mounted. After the companies paid back the $191 billion taxpayer bailout they provided during the housing crash, with interest, the debate continues about how they should operate in the future.
As president, Donald Trump began the process of “revival” of companies. However, Democrats scrapped plans to privatize Fannie and Freddie after Trump lost the 2020 election — prompting an exodus of top executives from both companies. Still, privatizing Fannie and Freddie remains a priority for some conservatives.
Discussions are reported to have explored various options, one of which could include using the Federal Housing Finance Agency and bypassing Congress. Another option would involve using the Treasury Department to buy a portion of Fannie and Freddie’s loans, according to I Journal report. The report also says that one of the priorities of the bankers and former Trump officials in their negotiations is to ensure that Fannie and Freddie remain solvent so that they do not threaten the housing market.
As of June 30, Fannie and Freddie’s combined total assets were $139.7 billion, up 11 percent from $125.4 billion at the start of the year. Former Freddie Mac CEO Donald Layton estimated that Fannie and Freddie could be considered replacements when their combined value reached $150 billion.
But the actual amount needed will depend on how the mortgage giants can be structured once they are taken out of the conservatorship and how much backstop the government will provide.
Trump’s opponent in the November election, Vice President Kamala Harris, said at a campaign event last month that privatizing Fannie Mae and Freddie Mac could add $1,200 a year in extra interest costs to America’s mortgages.
Email Jim Dalrymple II
