The value of government-sponsored enterprises' Fannie Mae and Freddie Mac stems from their mortgage-market role and experts at a Bipartisan Policy Center event at times took varying stances on what it would take to preserve and protect that position amid reform.
The panel's comments arrived ahead of Federal Housing Finance Agency Director Bill Pulte's ongoing steps he's taking in conjunction with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to explore
The three officials are "working on some options" for President Trump to consider as far as a new public offering for the Great American Mortgage Corporation, Bill Pulte told Fox Business News' Maria in an interview Friday morning.
Views on the implicit guarantee
One key question in many reform discussions has been whether an implicit guarantee is sufficient to give investors confidence.
Hugh Frater, who is a BPC board member, former chief executive at Fannie and an investor, said it should be.
"It's clearly valuable to the enterprises," said the former Fannie exec, who currently chairs Vessel Technologies, a developer and manufacturer of panelized apartment buildings.
The implicit guarantee has given Fannie and Freddie a cost of capital below this seen in the purely private sector, he noted.
His view contrasts with that of
Broeksmit has said a change in the GSEs' status risks disrupting their mortgage bonds in ways that could put upward pressure on interest rates, at odds with industry and Trump administration goals to reduce financing costs.
The implicit guarantee has been viewed as a more expedient path to reform through a potential public offering without Congressional intervention.
Other potential keys to investor confidence
"It's not obvious to me that there's a big pickup by getting an explicit guarantee," Frater said, while noting other steps would have to be taken to protect the system and give investors confidence
Preservation of the Treasury's preferred stock agreements established in conservatorship would be one of these, he said.
It's one of many questions that would have to be addressed in any reform plans, said Laurie Goodman, a fellow at the Urban Institute's Housing Finance Policy Center and a former preconservatorship MBS researcher who was followed closely on Wall Street.
Goodman said the Treasury's conservatorship line of credit is likely to stay in place in any reform plan because it's "the easiest way to provide the implicit guarantee."
Frater said GSE reform would require strong capital standards in line with broad consensus. He said current capital levels have the potential to be more than sufficient, in contrast with some other views.
"I think these enterprises, honestly, are dramatically - will be dramatically - overcapitalized," Frater said, while citing as financial strengths features of their business like the low mark-to-market loan-to-value of the mortgages they guarantee and the risk sharing they do.
Ed DeMarco, a former acting director for the GSEs' oversight agency and current president of the Housing Policy Council, showed some concern that current levels of risk sharing are insufficient.
"This program has evolved in conservatorship over the last several years in a way in which the amount of risk actually effectively being transferred is much smaller than in the early, early years; and much smaller than what's been envisioned," he said.
Mark Calabria, a current administration official who previously headed the Federal Housing Finance Agency in President Trump's first term, was cautious about the extent credit risk transfers could be counted toward capital, causing one GSE to drop out temporarily.
Calabria has declined to comment on current reform efforts and Pulte has said he is open to credit risk transfer use.
KBW: public offering may be just months away
Pulte reiterated Friday that when and if a public offering related to the GSEs takes place is in President Trump's hands but some analysts recently said a near-term action is possible.
"We think an attempt at GSE privatization appears likely to start in early 2026, but hurdles still exist," Keefe, Bruyette & Woods analysts said in a report
Prices for Fannie and Freddie's existing shares jumped earlier this week but then plateaued. KBW has given an "underperform" rating to both due to dilution risk in the common shares, while indicating "there could be value for the junior preferreds."
