Democrats could weaponize Fannie and Freddie in future, says Ackman
A commitment fee paid by companies for the current government backstop – valued at about $450 billion – would give Fannie and Freddie a “stupid” amount of capital, he added.
“There’s no scenario in which these entities would be a threat to the market,” Ackman said. “I would argue mortgage spreads tighten in that world because the fear would be, if it’s a Democratic administration that wins the next presidential election, I think that creates uncertainty about how Fannie and Freddie are going to be used, what’s going to happen with their capital.”
While ending conservatorship seems to have been placed on the backburner this year, Ackman said he sees the end of 2027 as a realistic target to bring the mortgage giants into the open.
“If I were [them], I would get busy on this right after the turn of the year and get it done in the 2027 timeframe,” he said.
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