Reports indicate that the U.S. government is considering allowing "the two housing enterprises" to go public this year, potentially raising $30 billion

The U.S. government is considering selling shares of Freddie Mac and Fannie Mae, possibly starting this year.

On August 8, according to media reports, the U.S. government plans to sell 5% to 15% of the shares of the two companies, expecting to raise about $30 billion. This move implies that the valuation of these two government-controlled enterprises could reach $500 billion or more.

However, reports indicate that Trump is still weighing various options and has not yet made a final decision. The Trump administration attempted to push for the privatization of the two companies during its first term but was unsuccessful.

These two companies were on the brink of bankruptcy due to massive losses during the 2008 subprime mortgage crisis, and the U.S. government took them over through the Federal Housing Finance Agency (FHFA), injecting about $187.5 billion to stabilize their operations.

Since then, the two companies have entered a "conservatorship," controlled by the government, and their stocks were delisted from the New York Stock Exchange, trading instead in the over-the-counter market.

After the news broke, Freddie Mac's stock price surged by as much as 22% on Friday, marking the largest increase in over two months. Fannie Mae also saw a significant rise of over 10%.

This stock sale could bring unexpected gains to hedge funds and other investors. Institutions like Bill Ackman's Pershing Square Asset Management hold a large number of shares in Freddie Mac and have been publicly lobbying the White House to end the conservatorship.

Wall Street Giants Actively Involved in Plan Formulation

In recent weeks, Trump has met with the CEOs of several large banks to hear their suggestions on how to execute this complex operation.

Reports indicate that Citigroup CEO Jane Fraser met with Trump on Wednesday. Leaders from Goldman Sachs, JP Morgan, Bank of America, and Wells Fargo have already or plan to pitch to the president.

Treasury Secretary Mnuchin, Commerce Secretary Ross, and FHFA Director Bill Pulte participated in related meetings. Notably, Pulte dismissed most of the board members of the two companies in March this year and appointed himself as chairman of both companies.

David Dworkin, President and CEO of the National Housing Conference, pointed out that investor interest in the stocks may depend on whether Pulte will relinquish his board seat. He stated:

The importance of an independent board of directors to stock value cannot be underestimated. Investors want to know that the company's board has a fiduciary duty to shareholders and is not subject to political interference.

Over the past several years, efforts in Congress to free the "two GSEs" from government control have repeatedly failed due to concerns about the impact on mortgage costs and the companies' commitments to affordable housing.

Reports quote U.S. officials as saying that even if they go public, Freddie Mac and Fannie Mae may still temporarily remain under government conservatorship. David Dworkin commented:

This is an extremely complex task, and completing it by the end of the year would be a significant achievement. We must take it seriously, as it is clear that all suitable candidates are with us