WASHINGTON—Fannie Mae and Freddie Mac have hired investment advisors as they seek to exit control of the federal government.
The two secondary mortgage giants have been operating under federal government conservatorship since the financial and housing crisis of a decade ago, and multiple plans and proposals have been put forth over the years for the two companies to return to independence.
Now, Fannie Mae has hired Morgan Stanley to advise the mortgage giant on its eventual exit from U.S. control, while Freddie Mac has retained JPMorgan Chase & Co.
The Wall Street firms will assist Fannie and Freddie in implementing strategies to build up their capital buffers and get out of conservatorship, Bloomberg reported.
“The announcements show that Fannie and Freddie are still pursuing plans to potentially raise billions of dollars through share sales even though the coronavirus crisis is raising questions about the health of the housing market,” Bloomberg stated. “While releasing Fannie and Freddie is a top goal of the Trump administration, the pandemic has pushed back the time frame for ending U.S. control.”
Election Might Affect Timetable
As CUToday.info reported earlier, Federal Housing Finance Agency Director Mark Calabria, Fannie and Freddie’s regulator, has said the companies could try to tap the capital markets as soon as next year, though it could take multiple share offerings spread over many months to fully capitalize the companies.
“A win in November by Democratic presidential candidate Joe Biden would complicate those plans if he tried to halt their exit from conservatorship,” Bloomberg stated.
In its statement, Fannie said Morgan Stanley will provide strategic counsel on a range of topics, including options for raising capital. Freddie made similar remarks about JPMorgan in its statement.