Compass Point senior policy and research analyst Ed Groshans says the agreement by the Department of the Treasury and Federal Housing Finance Agency to amend the preferred stock purchase agreements between Treasury and Fannie Mae (FNMA) and Freddie Mac (FMCC) is the “clearest signal yet” that the Trump administration will begin the process to release the government-sponsored enterprises from conservatorship. The Trump transition team is working with each federal agency to prepare to implement Trump’s agenda once he is inaugurated, the analyst tells investors in a research note. It appears that the preparations at Treasury and FHFA have raised concerns for the Biden administration, which resulted in the publication of the letter agreement and side letter agreement,” Compass adds. The firm expects Trump will direct the agencies’ actions and any of the recent changes that are not aligned with Trump’s goals will be undone. Shares of Fannie and Freddie are rallying this morning following the agreement.
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