By Joe Light
The release of Fannie Mae and Freddie Mac from government control might be some time away. But investors with a big stake in the outcome are actively campaigning to get President Donald Trump to help them see a payoff on their shares.
Hedge fund manager Bill Ackman brought his campaign directly to administration officials this month, according to people familiar with the matter. His big ask, which he has pushed publicly over the last several months, is for Trump to retire the government's "senior" preferred shares that give it a $370 billion claim on the two mortgage-finance firms.
The Pershing Square CEO pitched that plan in a blitz of meetings with government officials, the people said. The officials briefed included National Economic Council Director Kevin Hassett, White House Deputy Chief of Staff James Blair, Federal Housing Finance Agency Director Bill Pulte, and Treasury Under Secretary for Domestic Finance Jonathan McKernan, the people said.
A Pershing Square spokesman declined to comment.
Since 2008, Fannie and Freddie have been controlled by the government and don't send dividends to private shareholders.
The shares have become essentially a political bet on whether, when, and how the Trump administration or a future president decides to relinquish control of them. Depending on the president's decisions, a restructuring could wipe out existing shareholders or alternatively see them realize a return of hundreds of billions of dollars on their investments. Since 2008, the government has taken no conclusive action, leaving shareholders in purgatory.
Shares of Fannie and Freddie, which trade over the counter, soared last year after Trump on social media said he was working on taking the companies public. Untangling the government's stake is the critical issue for private shareholders in Fannie and Freddie, which buy mortgages from lenders and form the backbone of the U.S. housing market. After taking over the two firms in 2008, the government eventually injected them with nearly $200 billion in bailout money.
In return for the bailout, the U.S. Treasury received warrants to acquire nearly 80% of the companies' common stock, as well as a new class of senior preferred shares. Those shares' liquidation preference -- the government's claim on the companies' value before other shareholders get paid -- has risen to about $370 billion as of this month.
The companies' pre-bailout common and preferred shares continued to trade after the government intervention, and hedge funds and other investors snapped up the stock in the years after the crisis. More than a decade ago, Ackman disclosed that his funds had acquired more than 10% of Fannie and Freddie's common shares. Other institutional investors homed in on Fannie's and Freddie's pre-bailout "junior" preferred shares as a less risky bet.
In the nearly 18 years since the bailout, many shareholders have brought lawsuits and lobbied the government in the hope the companies will be released or restructured in a way that makes the share prices go up.
Ackman's most recent Fannie-Freddie plan, which he outlined in November, has narrower near-term ambitions than what some advocates of releasing the companies have called for.
Rather than releasing the companies immediately or to selling part of the government's stake, the plan calls for the government to "deem repaid" the senior preferred stock it owns. Ackman argues the government has already been compensated by the more than $300 billion in dividends that it has received from the shares.
The plan also asks for the government to exercise its warrants to acquire nearly 80% of the companies' common stock and relist the shares on the New York Stock Exchange. Ackman's plan says the government can then take the rest of Trump's term to "carefully plan an exit from conservatorship."
It isn't clear how receptive the government officials who met with Ackman were to the plan. In any case, Trump will ultimately have to make the decision to move forward with any Fannie-Freddie plan himself.
The president and government officials have given various timelines on when a share offering could happen and have floated the possibility of the government initially selling a small slug of its shares rather than everything at once. So far, the administration hasn't detailed what would happen to the companies' existing shareholders if the companies were restructured. In the past, Treasury Secretary Scott Bessent has said that the administration's guiding principle would be that any plan not raise mortgage rates.
To that end, Ackman has argued that merely retiring the senior preferred shares and uplisting the companies to a main exchange like the NYSE wouldn't have an impact on the mortgage-bond market.
The risks to Fannie and Freddie's private shareholders -- and especially to the ones like Ackman who own common shares -- are still acute.
Rather than retire the senior preferred shares, Trump could decide to convert them to common shares, which would severely dilute the value of the existing common stock. He could also decide to do nothing, and in the near-term the president and much of his economic team are focused on the war in Iran and the cost-of-living issues more pertinent to voters in the November midterm elections.
After the war and the midterms, Trump will have the chance to turn back to Fannie and Freddie and outline what exactly he plans for the government's shares. Until then, a bet on Fannie and Freddie's common stocks is essentially a crapshoot.
Write to Joe Light at joe.light@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 20, 2026 13:36 ET (17:36 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
