With US President Donald Trump issuing a directive requiring Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities (MBS), the Trump administration has opened a new front in the effort to enhance housing affordability. This move, however, which tasks these government-supported housing finance giants with acting as massive buyers, also signals a broader reinforcement of executive power, effectively placing the White House in a role traditionally held by the Federal Reserve and intensifying the debate over how far a president can go in steering financial markets. According to market participants, if the two companies execute the purchases as directed—though the timing and pace remain unclear—it would mark the first time in recent memory that a US President has directly intervened in housing finance through large-scale asset purchases. This is notable because, historically, the task of influencing interest rates across broad swathes of the economy has belonged to the Federal Reserve, an institution specifically designed to be insulated from political interference. Beyond setting short-term borrowing costs, the Fed has occasionally intervened in markets by purchasing vast quantities of US Treasury bonds and mortgage-backed securities, but only in limited circumstances, such as restoring liquidity to stressed markets or providing stimulus during severe economic downturns. Analysts stated that although the $200 billion Fannie and Freddie are being asked to buy is modest compared to the Fed's multi-trillion dollar quantitative easing programs, the action would still exert significant downward pressure on mortgage rates, potentially lowering them by as much as 0.25 percentage points. Furthermore, there is no clear constraint indicating whether Trump could order additional purchases beyond this round. "The directive 'blurs the line between market-driven public utility and political manipulation,'" Baird & Co. strategist Kirill Krylov said in a report to clients on Friday. "Explicitly buying assets to manipulate mortgage rates reintroduces political risk into a market that has spent over a decade distancing itself from such practices." A spokesperson for the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, did not respond to a request for comment. The White House declined to comment. In the months leading up to the announcement, Trump had been publicly pressuring the Fed to cut interest rates to boost economic growth and reduce borrowing costs. Some observers suggest this directive represents the President potentially seeking an alternative path to influence the central bank, signaling a willingness to act unilaterally if monetary policy actions are not swift enough to align with government objectives. "These purchases might be justified on housing affordability grounds, as that falls outside the Fed's mandate, but the mortgage market does not exist in a vacuum; it is entangled with overall interest rate setting policy," said Jeffrey Gordon, co-director of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School. "The executive branch engaging in what is effectively a form of monetary policy sets a new precedent and undermines Fed independence." Prior to the 2008 financial crisis, recent administrations did not possess the kind of direct control over Fannie Mae and Freddie Mac that Trump is now demonstrating. The two companies were established decades ago to support the US housing loan market. After the housing market crash devastated their assets and funding, they were placed into government conservatorship, where they remain today while working to rebuild capital. Market reaction since Trump's announcement has been pronounced. The risk premium on recently issued mortgage-backed securities has fallen by approximately 0.18 percentage points from Thursday's close. Experts indicate this will likely translate into a corresponding decline in mortgage rates. "This is the benefit of running things in a corporate manner; you have options for your cash," FHFA Director Bill Pulte said in a brief telephone interview on Thursday. He added, "We are focused on leveraging Fannie Mae and Freddie Mac in a way that no president has done before."