By Joe Light

The Trump administration is ramping up talks on what to do with mortgage giants Fannie Mae and Freddie Mac. A fractious relationship between Treasury Secretary Scott Bessent and Bill Pulte, who heads Fannie and Freddie's regulator, could complicate the process.

This week, Treasury officials are convening representatives of major bond investors, lenders, consumer advocates, and other stakeholders on what to do with Fannie and Freddie, which together guarantee about $7 trillion in mortgage-backed securities. The meetings are the latest sign that the Trump administration is seriously considering making major changes to the companies, which have been in government control since the 2008 financial crisis.

The talks come as tensions between Bessent and Pulte have blown out into the open. Pulte's public profile has risen recently as he has spearheaded a campaign to force Fed governor Lisa Cook to resign over allegations of mortgage fraud, which she denies. Bessent last week at a private club threatened to punch Pulte in the face, according to news reports, after Bessent said Pulte had disparaged him in front of Trump.

Spokespeople for the FHFA and Treasury didn't respond to requests for comment on the dispute or the meetings.

This week, the FHFA is holding at least one Fannie-Freddie roundtable of its own, and some of the meetings' participants say they see the counterprogramming in part as attempts by both agencies to put their flags in the ground on the issue.

Treasury held two meetings Monday that focused on big-picture questions of how to reform the companies and the mortgage finance system, according to people familiar with the matter. In contrast, Pulte both publicly and privately has homed in on the idea of having a near-term public offering of a small slug of the government's shares. Such a sale could generate tens of billions in government revenue, but it wouldn't resolve thornier issues of what to do about the companies.

Fannie and Freddie don't make mortgages themselves. They buy them from lenders, wrap them into securities, and make guarantees to make bond investors whole in case of default.

The companies were bailed out by the government in 2008 and were placed in a so-called conservatorship controlled by the Federal Housing Finance Agency. Under the terms of the bailout, the Treasury received options to acquire nearly 80% of the companies' common stock as well as a new class of "senior" preferred shares. President Donald Trump's administration worked on plans to potentially end the conservatorships in 2020 but ran out of time.

In May, Trump said on social media he is "working on TAKING THESE AMAZING COMPANIES PUBLIC," but the administration so far has been light on details for what a public offering would entail.

Shares of Fannie and Freddie have skyrocketed this year on speculation that a public offering or release of the companies could result in legacy shareholders realizing some of their profits. Common shares of Fannie are up 336% to about $14.30, while shares of Freddie have risen 277% to $12.32 since the end of last year. Holders of the common shares include Pershing Square Capital Management, a hedge fund firm founded by Bill Ackman, a Trump supporter and longtime advocate for releasing the companies.

Both the Treasury and FHFA have a stake in what to do about Fannie and Freddie. But over the last several weeks, the agencies appear to have gone off on separate tracks. Last week, Pulte told Fox Business that the administration wanted to sell around 5% of the two mortgage giants in a public offering, which could be worth tens of billions of dollars. He has separately said that he doesn't believe Trump would ever give up control of the companies and that they could stay in conservatorship.

The Treasury Department, however, appears to be working on a longer term reform plan. On Monday, the agency kicked off a series of at least seven meetings with people involved in the mortgage industry, including representatives from major bond investors, lenders, consumer advocates, and think tanks.

At the first two meetings in the Treasury building on Monday, which each lasted about two hours, officials asked about the risks of modifying the conservatorship and suggestions on how to reform Fannie and Freddie, according to people familiar with the matter.

Participants in the meetings generally said that Fannie and Freddie risked abusing their market dominance outside of conservatorship without a stronger regulator. Representatives of bond investors warned that mortgage rates could rise and that the mortgage-backed securities market could fracture without clearer government backing of that market.

Participants in both meetings discouraged merging Fannie and Freddie into one company, an idea floated by Pulte and Trump in social media posts. Some of the participants said having one company would further concentrate market power and eliminate any semblance of competition in the secondary mortgage market. Neither the Treasury officials nor the outside participants asked or talked about what to do about Fannie and Freddie's private shareholders or the idea of a public offering of Fannie or Freddie's shares later this year.

Treasury officials for the most part didn't speak apart from asking questions, but the officials did reiterate assurances that Bessent has made publicly in the past that changes to Fannie and Freddie would "do no harm" and not raise mortgage rates, the people said. The officials also said they hoped the meetings would be the start of a long-term dialogue on the issue between the department and the mortgage stakeholders.

The FHFA has separately scheduled at least one roundtable of its own for this week, and some of the participants, who were invited to both, viewed the overlapping meetings as attempts by each agency to stake a claim to running the Fannie-Freddie reform process.

Write to Joe Light at joe.light@barrons.com

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September 09, 2025 14:36 ET (18:36 GMT)

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