Bill Ackman calls Trump's plan for Fannie-Freddie IPO not ‘feasible nor desirable' — here's his solution

Core Viewpoint - Proposals for an initial public offering (IPO) of Fannie Mae and Freddie Mac are currently deemed neither feasible nor desirable, according to Bill Ackman, founder of Pershing Square Capital Management [2][6]. Group 1: Current Status and Challenges - The U.S. government has been controlling Fannie Mae and Freddie Mac for 17 years and is exploring various structures for a potential IPO, including the creation of a single company for both entities, but the complexity of such a deal poses significant hurdles [1][8]. - Both Fannie Mae and Freddie Mac are already listed in the over-the-counter market, which complicates the transition to a public offering [2][4]. Group 2: Future Considerations - The Trump administration is considering an IPO as a way to end the conservatorship that began in 2008, with potential evaluations for such a move possibly occurring as soon as the end of 2025 [3][9]. - Ackman suggests that instead of an IPO, the companies could convert their current over-the-counter listings to the New York Stock Exchange, a process he estimates could take a few weeks [4]. Group 3: Valuation and Government Stakes - Ackman estimates that the combined valuations of Fannie Mae and Freddie Mac could approach $400 billion, with the government's stakes potentially worth around $300 billion [5]. Group 4: Proposed Steps for Listing - Ackman has proposed several steps to facilitate a listing, including recognizing previous payments as repayment of senior preferred stock and allowing the U.S. Treasury to exercise warrants to achieve a 79.9% common stock stake [7]. - Lowering the current capital requirement of 4.5% of all guarantees is also suggested as a necessary step [7]. Group 5: Legislative and Structural Hurdles - Merging Fannie Mae and Freddie Mac into a single entity for a listing is not feasible without congressional approval, according to sources [8][11]. - Creating a holding company for selling stakes is complicated by government restrictions, and using an existing joint venture as a listing vehicle would involve transferring assets, which adds to the complexity [11].