In July, FHFA Director Mark Calabria said in a press interview that the Trump administration’s housing finance reform plan was “essentially done,” and that he expected it to be published by August or September. This represents a delay from prior comments by Dr. Calabria and other officials who indicated that the report would be released as early as June. Press reports have suggested that the delay is at least in part due to other initiatives at Treasury given the number of urgent matters that have been occupying Treasury Secretary Mnuchin’s time, most notably, the trade negotiations with China.
While the delay is disappointing, nothing has transpired to indicate that the administration’s priorities to end the conservatorships and recapitalize the GSEs have changed. In addition to the report, key milestones that we expect in the coming months include the release of FHFA’s final capital rule for Fannie and Freddie, negotiations between Treasury and FHFA to modify the Preferred Stock Purchase Agreements and potentially suspend the net worth sweep, and preparations for a private capital raise.
FNMA (FNMA) and FMCC common shares have increased 119% and 114% respectively, year-to-date. Fannie and Freddie preferred shares have increased 57% and 60% respectively, year-to-date.
From Bill Ackman (Trades, Portfolio)'s second-quarter 2019 Pershing Square shareholder letter.
