Financiera

Fannie, Freddie need to get out of government ownership: Mnuchin

Fannie, Freddie need to get out of government ownership: Mnuchin

Stock in District-based Fannie Mae and McLean-based Freddie Mac each jumped more than 30 percent Wednesday after president-elect Donald Trump's choice for Treasury secretary said the two should be set free from government oversight.

"But we've got to get them out of government control", Mnuchin said.

"We've got to get Fannie and Freddie out of government ownership", Mnuchin said. "It makes no sense that these are owned by the government and have been controlled by the government for as long as they have", Mnuchin said.

The comments, which came in an interview on Fox Business, sent shares of the mortgage-finance giants soaring in early trading Wednesday.

Common shares of the two companies, which have been in USA government conservatorship since the 2008 financial crisis, were both trading about 8 percent higher in premarket activity on the pink sheets market following Mnuchin's comments. Fannie and Freddie have been toiling within the US government since getting bailed out during the height of the financial crisis to the tune of almost $200 billion.

"People don't expect the government to just step away from the GSEs", said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in NY, using the acronym for government-sponsored enterprises.

Fannie surged 32% to $4.12, the biggest increase since April, while Freddie was up 32% to $3.99.

The two eventually returned to profitability as the housing market recovered and the taxpayer cost has been repaid in full.