Ackman Advocates Market-Based Exit Plan For Fannie And Freddie

The discussion surrounding the future of Fannie Mae and Freddie Mac has intensified in 2025, following years of conservatorship that have kept the U.S. housing finance system under federal oversight.

Bill Ackman, CEO of Pershing Square Capital Management, a prominent investment firm and shareholder in both Fannie and Freddie, issued a comprehensive proposal advocating the relisting of the GSEs on the New York Stock Exchange (NYSE).

Ackman asserts that a tactfully executed relisting can achieve three key goals:

• Maintain affordable mortgages for American homeowners
• Demonstrate mark-to-market value for taxpayers
• Maximize long-term shareholder value

On September 6, 2008, with consent of both Fannie Mae’s and Freddie Mac’s Boards of Directors, the Director of the Federal Housing Finance Agency (FHFA) exercised statutory authority to place each GSE into conservatorship. This move established the two conservatorships in response to a deterioration in the housing markets that severely damaged the financial condition of each, and left both of them unable to fulfill their missions without government intervention. 

The Current Market Context

Ackman notes that Fannie and Freddie have experienced significant market momentum in 2025. Both companies’ shares roughly doubled in value following statements from President Trump and other administration officials regarding potential actions on the GSEs. Investor interest has been strong across institutional and retail channels, with prominent firms such as Capital Group, Morgan Stanley, and Banco Santander participating actively in the market.

“One, the structure of the U.S. mortgage market — we’re committed to making sure that there is no change in the spread of mortgages over Treasuries," said Treasury Secretary Scott Bessent in a recent appearance on Fox News. "We actually believe there are things that can be done to make mortgages cheaper for the American people. And then on the other side, these are tremendously valuable companies, and President Trump wants to realize some of the value.”

Social media engagement has also highlighted growing retail interest in these stocks, with investors tracking potential relisting strategies and government policy developments. Pershing Square underscores that this enthusiasm reflects the broader market's recognition of the GSEs’ intrinsic value and the potential for a structured exit from conservatorship.

Three Core Objectives for the Trump Administration

According to Ackman, any plan regarding Fannie and Freddie should prioritize three overarching goals:

• Preserve mortgage affordability: Ensuring that American homeowners continue to have access to reasonably priced mortgages is paramount. Disruptions in the housing finance market could increase borrowing costs and limit homeownership opportunities.
• Demonstrate mark-to-market value: Relisting the GSEs would provide a transparent, market-based measure of their value, which has historically been obscured by conservatorship structures. Taxpayers have borne the cost of stabilizing the GSEs since the 2008 financial crisis, and market valuation would validate their investment.
• Maximize long-term value: A deliberate relisting allows the federal government to capitalize on market conditions without resorting to a fire-sale, ensuring the taxpayer achieves maximum return while avoiding unnecessary risk.

Ackman stresses that these objectives must be balanced against broader economic considerations, including stability in the mortgage market and the ongoing oversight responsibilities of federal regulators.

Challenges Of A Premature Exit

Pershing Square cautions against an immediate sale of GSE shares. Doing so could dilute taxpayer ownership, potentially sell shares below market value, or fail to achieve the desired outcome due to conservatorship constraints. A rushed transaction risks destabilizing the mortgage market, increasing borrowing costs, and undermining public confidence.

Instead, a measured approach has been proposed, one that preserves conservatorship safeguards, while preparing the GSEs for a controlled re-entry into public markets. This strategy emphasizes transparency, regulatory compliance, and market validation.

“I think it's going to be sort of a, it could well be a this-year thing," said Commerce Secretary Howard Lutnick in a September appearance on CNBC. "Now, do we want to sell a lot? No, no. What we want to do is show a mark to market, right? That the President shows these are assets that we, the American taxpayers, own, and look how much they're worth, look how well they do. And what we want to do is keep the price of a home mortgage as low as mathematically possible. We don't want to take any action that raises that spread because that makes homeownership tougher, and we want to make home ownership easier.”

Recommended Relisting Strategy

The Pershing Square proposal outlines a three-step strategy for relisting Fannie and Freddie:

• Repay senior preferred stock: The Treasury Department currently holds preferred stock in both companies, which entitles it to dividends and certain control rights. Repayment of these shares would reset the capital structure, providing a cleaner balance sheet for relisting.
• Exercise Treasury warrants: The Treasury holds 79.9% warrants in both Fannie Mae and Freddie Mac. Exercising these warrants prior to relisting would clarify ownership and enable a transparent distribution of shares to public investors.
• NYSE relisting: Finally, relisting the shares on the NYSE would provide a market-driven price discovery mechanism, demonstrating the GSEs’ value in real-time and attracting both institutional and retail investors. Pershing Square emphasizes that this step could be implemented immediately, without requiring a full exit from conservatorship.

Market And Regulatory Benefits

The proposed strategy offers several benefits to multiple stakeholders:

• For taxpayers: Market valuation would provide a clear, transparent measure of the federal investment’s worth, reducing uncertainty about the GSEs’ financial position.
• For homeowners: By maintaining conservatorship oversight, the plan ensures that mortgage affordability remains a priority, avoiding sudden increases in interest rates or stricter lending conditions.
• For investors: Relisting allows market participants to evaluate the GSEs based on fundamentals, capitalizing on transparent valuations without assuming undue risk.
• For regulators: The structured relisting respects existing regulatory requirements, ensuring compliance while creating a path toward gradual privatization.

The analysis points to the strong market response since early 2025. Key observations include:

• Share prices for Fannie and Freddie have risen dramatically in anticipation of potential policy changes.
• Investor appetite, both institutional and retail, remains robust, suggesting favorable conditions for a successful relisting.
• The market has demonstrated a willingness to value the GSEs based on future cash flows and risk-adjusted metrics, providing confidence in price discovery.

The presentation also underscores that the rising interest in GSE shares is not purely speculative; it reflects growing recognition of their central role in stabilizing the U.S. housing market.

Strategic Timing

Ackman notes that timing is critical. Relisting should occur during a period of market stability, avoiding times of extreme volatility or macroeconomic uncertainty. Immediate action is feasible, given the current environment of relatively low interest rates, improving economic indicators, and positive investor sentiment.

A phased approach allows for flexibility: the government can gradually reduce its stake over time, while preserving conservatorship protections, thus mitigating risk to both taxpayers and homeowners.

Leadership Considerations

The proposal also emphasizes the importance of strong leadership in overseeing the relisting process. Experienced executives are needed to manage regulatory compliance, investor relations, and operational stability. Pershing Square suggests that proper incentives and governance structures are key to ensuring a smooth transition and maintaining market confidence.

Social And Economic Implications

Beyond financial considerations, the plan addresses broader social and economic objectives:

• Homeownership access: Ensuring that Fannie and Freddie continue to support low- and moderate-income borrowers.
• Housing market stability: Avoiding abrupt changes that could destabilize home prices or mortgage availability.
• Public trust: Demonstrating that the government can manage privatization responsibly, safeguarding taxpayer interests while returning enterprises to market-driven ownership.

By repaying Treasury preferred stock, exercising warrants, and relisting on the NYSE, Pershing Square underscores that the approach is not a full exit from conservatorship, but a controlled, transparent, and immediate step toward eventual privatization. By balancing financial, regulatory, and social considerations, the strategy seeks to satisfy the needs of investors, regulators, and the American public, while reinforcing the stability of the housing finance system.