Fannie Mae, Freddie Mac rally as Ackman presses for conservatorship exit

Bill Ackman, chief executive officer of Pershing Square Capital Management LP, center, during the company's initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, April 29, 2026.

Michael Nagle | Bloomberg | Getty Images

The midterm elections could be a turning point for the release of Fannie Mae and Freddie Mac from government control, according to billionaire investor Bill Ackman.

Investors may agree with him, if the rally in both stocks is any sign.

The Federal National Mortgage Association, known as Fannie Mae, and Federal Home Loan Mortgage Corporation, or Freddie Mac, have each jumped more than 60% from Oct. 14 to Monday's close. The stocks were both up roughly 3% on Tuesday.

Ackman, the founder of Pershing Square Capital Management, has long pushed for the two entities to be released from federal conservatorship.

"The reason why it's not being touched right now is, you know, midterms," he said in an interview with CNBC's "Squawk Box."

Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) over the last month.

Ackman, who owns both names through Pershing Square, believes Freddie and Fannie have the potential to increase "10-fold from current share prices," he said in his quarterly letter to shareholders, issued on Monday.

Fannie and Freddie buy mortgages from banks and other lenders, and then package them into mortgage-backed securities, known as MBS. Their operations are critical to the housing market, providing liquidity to banks and creating a secondary market for MBS.

The entities were placed into conservatorship in September 2008, during the financial crisis. The stocks were delisted from the New York Stock Exchange in 2010 and have traded over the counter since then.

Ackman wants the conservatorship to end, arguing the entities would be worth multiples of their current valuation if they were freed from government control.

President Donald Trump has supported ending the conservatorship of Fannie and Freddie. But it remains politically and economically contentious.

The entities operate under strict capital threshold requirements and would need to be recapitalized, which could happen through issuing common equity. However, the Treasury Department would need to figure out an exit plan for its roughly $388 billion ownership stake in the entities through preferred securities and warrants.

Congress may also need to play a role, passing legislation to restructure the government's role in mortgage financing and home-loan guarantees.

Nonetheless, Treasury Secretary Scott Bessent recently said it could happen before Trump's term ends, telling 2Way's "The Morning Meeting" podcast that the administration will tackle the ownership structure "next year, the year after." He said affordability will be guiding the decision.

One point of controversy is whether ending the conservatorship of Fannie and Freddie would increase the spreads on MBS over Treasuries, effectively making mortgages costlier. Bessent has sought to reassure the market that wouldn't happen.

"Whatever we do is going to be guided by making sure that the spread on [agency] mortgages … over the Treasury does not increase," Bessent said.

Ackman argues that privatizing the GSEs would help insulate them from political meddling. "Fannie and Freddie are these massive, enormously profitable institutions where whichever political party controls them…if they're still in conservatorship, can influence the outcome of elections," he told CNBC.

In one scenario, he explained, Democrats win the White House, conservatorship is still in place, and Democrats push Fannie and Freddie to lower credit standards in order to expand home ownership and affordability.

"If they're going to move more aggressively into borrowers with lower credit quality, for example, to achieve a political objective, that's going to have an impact on trillions of dollars outstanding mortgage securities," Ackman said. "It's going to have an impact on overall credit spreads."

MBS investors want certainty about how the entities will be run, he noted.

"That only gets resolved in a world in which they exit conservatorship, they become publicly traded companies that are owned by institutional and retail investors," Ackman said. "We set the rules. In conservatorship, the president can do anything."