Market Overview

C-Suite Shakeups Could Change The Course Of Fannie And Freddie's Conservatorship

C-Suite Shakeups Could Change The Course Of Fannie And Freddie's Conservatorship
Related FNMA
Tariffs, Drug Prices, Legislative Gridlock: What Economists Are Watching Following The Midterm Election
Here's What's At Stake For Your Investments In The 2018 Midterms
Tracking Bill Ackman's Pershing Square Portfolio - Q3 2018 Update (Seeking Alpha)
Related FMCC
The Home Affordable Refinance Program Is Ending Again, For Real This Time
This Day In Market History: The $700B TARP Bailout
Tracking Bill Ackman's Pershing Square Portfolio - Q3 2018 Update (Seeking Alpha)

Love him or hate him, Treasury Secretary Steven Mnuchin may be the best and last hope for Federal National Mortgage Association (OTC: FNMA) and Federal Home Loan Mortgage Corp (OTC: FMCC) investors.

Mnuchin’s ability to assemble a “dream team” of cooperators as heads of Fannie Mae, Freddie Mac and the Federal Housing Finance Agency could be the only way to move forward with a plan to recapitalize the GSEs and remove them from conservatorship, analysts from Height Capital Markets said in a note.

Putting Together The Pieces

Current FHFA president Mel Watt’s term is ending Jan. 6, Fannie Mae CEO Tim Mayopoulos is stepping down Oct. 15, and Freddie Mac CEO Don Layton is resigning in the second half of 2019.

“Mnuchin is in a position to have input into the next FHFA Director, Fannie Mae CEO, and Freddie Mac CEO,” Height wrote this week.

Height says the leading candidate for Watt’s position is Office of the Comptroller of the Currency Comptroller Joseph Otting. Otting was previously CEO of OneWest Bank when Mnuchin held a controlling interest in the company.

Mnuchin’s Dream Team

Fannie Mae board member Hugh Frater will serve as the interim CEO for the company, and Height said it's unclear whether or not he has Mnuchin’s blessing to potentially take over as permanent CEO. Height expects the Fannie Mae board to seek Mnuchin’s approval before naming a permanent CEO.

Height expects Mnuchin to have a similar say in the next Freddie Mac CEO as well.

“With these three positions aligned and supportive of Treasury's agenda for the GSEs, which we believe includes recapitalization and release from conservatorship, we view 2019 as the best opportunity for Treasury to act,” Height wrote.

After initial market enthusiasm following Donald Trump’s election victory in 2016, Fannie and Freddie’s stocks are now down more than 65 percent each since Trump’s inauguration.

Related Links:

Fannie And Freddie Investors Find A Silver Lining Amid Claim Dismissals

Fannie, Freddie's Fate Could Rest On Potential Trump Nominee

Posted-In: fannie mae freddie mac GSEsAnalyst Color Politics Management Analyst Ratings General Best of Benzinga


Related Articles (FMCC + FNMA)

View Comments and Join the Discussion!

Latest Ratings

CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

This Week In Cryptocurrency: SEC Cracks Down On ICOs, Crypto Safe Haven Trade Fails

Morgan Stanley: A Sears Bankruptcy Could Benefit J.C. Penney