President Trump is asking top bankers for pitches on monetizing the mortgage giants, including a major public stock offering. Bloomberg Finance Reporter Katherine Doherty talks about the discussions.

Washington

Donald Trump has initiated meetings with CEOs of leading U.S. banks to explore the possibility of a full initial public offering (IPO) for Fannie Mae and Freddie Mac. Currently, only a portion of shares in these government-sponsored enterprises are publicly traded, and Trump is seeking input from banks on how to fully monetize the entities.

The discussions come as the industry anticipates new risk-based capital rules, which are expected to be less strict than previously proposed. These regulatory changes are not immediate, with proposals possibly delayed until the first quarter of 2026. The outcome of these talks could have significant implications for the investment banking sector and the broader financial industry.

Trump asks banks to pitch Fannie, Freddie IPOs

In the last Trump term, you did see the conversation start to slowly take off. We didn't get there, but now it looks like it's much more serious. Yes. You mentioned the top bankers at the U.S. bank. The CEOs. These are the CEOs. These are the leaders of the biggest U.S. firms that we have here. So we saw them, and these meetings continue with Donald Trump. We do not know the specifics because that is exactly what Trump wants to hear from these leaders. He's bringing them in one by one, and he's essentially asking them to pitch the way that Fannie and Freddie might be monetized. So how that actually plays out is going to be the next big story that we're going to be paying attention to. But even the talks and the ideas that are shared within the White House is really the big story today. And moving ahead, it's going to be what does that look like in the future? Yeah. I mean, what are the options? Because obviously the shares are trading, right? So it's not like an IPO is likely since that would be initial public offering. So only a portion of the shares are traded, and they're not fully monetized. So he is looking to hear from the banks that what can you do for Fannie and Freddie to do a bigger IPO where maybe it's full-fledged, maybe we're going to have other pieces of it. That's kind of the big question here. What does the structure look like? Because currently the way that Fannie and Freddie is traded is not a full initial public offering. Is there anything else that trades with what used to be implicit, but now an explicit government guarantee on their products? I think that's kind of the big discussion here and the significance that you're pointing out. So I believe that these CEOs, they know what kind of a big deal this is, not just for the United States, but for their own firms too. Whichever firm is picked to lead based on the idea that they're presenting to the president is going to have huge ramifications for their future prospects in the investment banking industry. Right. These types of deals don't come around all that much. It's kind of like the TARP era deals, right? It's like the prestige that comes with the listing more than the actual listing itself. There's another story too. Speaking of Mickey Bowman, who has been making a lot of news this week, but today in particular, this is starting the process of new risk-based capital rules that the banks could see. You are not really seeing the love being found within the banks today. Is it because the expectation here is that, yes, we'll be less strict than we initially planned, but still you'll see new rules? I think that this is not an unexpected outcome. Everyone was expecting that the rules are not just going to go away. They're going to be lesser than this 9% that was not even fully digested, but presented under Michael Barr. So now if you have the future of Basel III endgame going to look even less than 9%, again, it's not going away. It's just going to be diluted from what was previously talked about. And I believe that this has been priced in. This is not unexpected across the street. We've been hearing and we've been reporting out. My colleague Katanga Johnson in D.C., he's been all over this story. And we really have telegraphed from day one, moving into the Trump administration, it's likely to look like a just watered-down capital requirements for the banks. So it's really gung-ho for the industry. They're off and running. And it means that they will likely, after rules are finalized, and in this story, what is being reported out, is that this proposal might not even come until the first quarter of 2026. So this is not something that happens overnight. We're still going to see this play out. But what is expected, I think, is beyond what, there's nothing here that I think would cause concern.

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