DOGE may push for Fannie Mae and Freddie Mac sale, TD Cowen says
2024.11.22 11:59
Investing.com — Department of Government Efficiency (DOGE) could push for sale of mortgage financing firms Fannie Mae (OTC:) and Freddie Mac (OTC:) as part of its efforts to generate cash for the government, according to a note from TD Cowen.
“We believe the DOGE may be positive for the recap and release of Fannie Mae and Freddie Mac,” analyst Jaret Seiberg wrote.
Fannie Mae and Freddie Mac, which has a central role in the U.S. housing finance system by providing liquidity to the mortgage market, are government-sponsored enterprises, or GSEs.
As government-sponsored enterprises (GSEs), they benefit from an implied government guarantee, allowing them to raise funds relatively cheaply by selling debt to investors. These funds are used to purchase home loans from mortgage originators such as banks, enabling lenders to issue fresh loans.
Analyst say cash raised from the sale of Fannie Mae and Freddie Mac to private investors would help reduce the federal deficit and ease government interest burdens over time, when DOGE may face resistance trying to cut popular programs or those generating revenue.
TD Cowen said, DOGE, which Elon Musk and Vivek Ramaswamy are heading, could frame this move as part of fulfilling conservative fiscal goals, by reducing debt without cutting popular programs.
