DoubleLine Asks: Will Trump Reprivatize Fannie and Freddie in His Second Term?

TAMPA, Fla., Jan. 7, 2025 /PRNewswire/ -- While the upcoming launch of Trump 2.0 has generated a lot of public speculation about the incoming administration's policies on immigration, tax cuts and tariffs, another area of policy focus from President Trump's first term could be revived: reprivatizing Fannie Mae and Freddie Mac. In a new research paper, DoubleLine Portfolio Manager Kunal Patel, CFA, and Analyst Alex Shvartser take a look at the history of the government-sponsored enterprises (GSEs) under conservatorship, the challenging pathway to reprivatization and such a move's impact on the Agency mortgage-backed securities market.

The research paper, "Agency Mortgage-Backed Securities: Fannie and Freddie Private Again Under Trump 2.0?," can be accessed here: https://doubleline.com/wp-content/uploads/AgencyMBS-Privatization-of-Fannie_Freddie_Jan2025.pdf.

"Privatizing the GSEs, if pursued, would be a massive and complex project that would take multiple years and likely require coordination among all three branches of government," Messrs. Patel and Shvartser write. "While privatization has significant risks and unclear political or economic upside relative to the status quo, it is certainly possible, and there is a good chance parts of it will be attempted at some point by the incoming administration, which might be a catalyst for sporadic volatility in the Agency mortgage-backed securities market."

Kunal Patel, CFA, is a Portfolio Manager on DoubleLine's Structured Products team. Mr. Patel joined DoubleLine in 2016 as a Mortgage Trader specializing in Agency RMBS and was later promoted to Portfolio Manager in 2021. Prior to DoubleLine, he worked as a Managing Director responsible for CMO and specified pool trading at Cantor Fitzgerald. Prior to that, Mr. Patel worked as a CMO, ARMs and Specified Pool Trader and Deal Structurer at Morgan Stanley, BNP Paribas and RBS Greenwich Capital. He holds a B.A. in Economics from Cornell University. Mr. Patel is a CFA® charterholder.

Alex Shvartser is an Analyst on DoubleLine's Structured Products team. Mr. Shvartser joined DoubleLine in 2020 as an Analyst on the Agency RMBS team. Prior to DoubleLine, he was with TCW as a Senior Vice President, Investment Analytics. Prior to TCW, Mr. Shvartser was a Quantitative Analyst at ICE Canyon. Prior to ICE Canyon, he was Vice President at BlackRock in the Financial Modeling Group. Mr. Shvartser holds a B.S. in Electrical Engineering from the California Institute of Technology and an M.S. in Mathematics in Finance from New York University.

About DoubleLine

DoubleLine Capital is an investment adviser registered under the Investment Advisers Act of 1940. DoubleLine's offices can be reached by telephone at (813) 791-7333 or by email at [email protected]. Media can reach DoubleLine by email at [email protected]. DoubleLine® is a registered trademark of DoubleLine Capital LP.

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SOURCE DoubleLine