Fannie Mae & Freddie Mac going private is 'playing with fire': Expert
Investors weigh whether Fannie Mae (FNMA) and Freddie Mac (FMCC) — the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, respectively — could go private, exiting government conservatorship during President-elect Donald Trump's second administration. Whalen Global Advisors chairman Chris Whalen joins Julie Hyman and Jared Blikre to discuss what going private would mean for mortgage companies and the competitive landscape that they would be entering by leaving their government conservatorship. Whalen outlines Fannie Mae and Freddie Mac's current function in the mortgage space, saying, "The Fannie [and] Freddie people really control the fat middle of the market." He adds, "They perform a very important function, but they compete with the banks on the high end and they also compete with Ginnie Mae [the Government National Mortgage Association (GNMA)] on the low end." "I think they are playing with fire here to some degree because Fannie and Freddie are going to have to compete with the banks, and they're going to have to compete with the non-bank issuers who have become extremely competitive over the past decade," Whalen says. For investors, he says Fannie Mae and Freddie Mac going private isn't necessarily good news. "Are these companies going to be good long-term investments for retail investors? I would say no," Whalen says, adding, "The long-term prospects, I think, is a big question mark." To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Naomi Buchanan.
