Hedge-fund billionaire Bill Ackman has voiced his support for a proposal to restructure the capital requirements of government-sponsored enterprises (GSEs), Federal National Mortgage Association (OTC:FNMA), Fannie Mae, and Federal Home Loan Mortgage Corporation (OTC:FMCC), Freddie Mac.
What Happened: In a major policy speech Tuesday, Treasury Secretary Scott Bessent called for sweeping changes to the bank capital framework, arguing that current rules are outdated, overly complex and stifling growth—particularly for community banks.
"These first steps are chipping away at years of regulatory accretion," Bessent said. "But isolated measures are not enough. We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth."
Bessent specifically criticized the dual-capital requirement proposed in 2023, calling it a "flawed" system that hinders modernization. He also highlighted the potential to reduce capital requirements on mortgage loans, which could benefit not only banks but also government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac.
Alec Mazo, general partner at DGA Capital, responded on X, saying, "Bessent also mentioned reducing capital levels for mortgage loans. Why would FHFA and Pulte keep duplicative buffers at the GSEs?"
He noted the GSEs are well-capitalized and suggested they are ready for NYSE relisting once capital rules are rationalized and government warrants are converted.
Ackman amplified Mazo's remarks, sharing the post with a two-word endorsement, saying, "Spot On."
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Why It Matters: Ackman’s endorsement of this proposal is significant, given his long-standing interest in the GSEs. In June, Ackman had highlighted the potential of the government’s stake in Fannie Mae and Freddie Mac, estimating it to be worth nearly $300 billion.
Earlier in May, former President Donald Trump had also expressed his intention to consider taking Fannie Mae and Freddie Mac public, suggesting a potential privatization of the government-sponsored enterprises.
These recent developments indicate a growing momentum towards potential changes in the GSEs’ structure, a move that could have significant implications for the housing finance market and the broader financial sector.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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