Fannie Mae (FNMA) and Freddie Mac (FMCC) Investors Are Watching Latest Developments Closely

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(Editor’s note: Article updated with latest development on Fannie Mae and Freddie Mac)

Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) are closely watching the latest developments which are happening with regard to Trump’s administration. President elect is expected to finalize on the members who will be part of the cabinet.

New Treasury Secretary and Commerce Secretary

Steven Mnuchin is appointed as the next treasury secretary; he was the finance chairman during Trump’s campaign. Mr. Mnuchin is known for purchase of mortgage lender IndyMac during 2009 as a private investor. He is also one of the ex-employee of Goldman Sachs. Billionaire investor Wilbur Ross will be joining the cabinet as Commerce Secretary. Mr. Mnuchin also stated that Fannie Mae (FNMA) and Freddie Mac (FMCC) need to get out of government ownership. The shares are trading up in pre-market by 8%.

FNMA FMCC

Credit @QTRresearch Twitter

Some lawmakers do not appreciate Mnuchin’s close relations with industries. Other candidates who were in the fray for treasury secretary were JPMorgan chief Jamie Dimon and private equity financier Wilbur Ross.

Steven Mnuchin’s biggest achievement was purchase of IndyMac which was one of the most complex deals. He has 17 years of experience at Goldman Sachs before joining George Soros’s hedge fund. Mr. Mnuchin is a Wall Street veteran and knows pretty well how things work. Below are the few pointers on what to expect from new Treasury Secretary.

1) Change of tax code

Steven Mnuchin has clearly stated that the corporate tax rate will be brought down to 15% while, there the taxes for middle class will be simplified. Mr. Mnuchin also stated that his lot of money which is stashed abroad will be brought back to U.S. through tax cuts. He also stated that the U.S. economy can grow at 3-4 percent.

2) Review of Sanctions

Review of sanctions which were lifted by Obama administration on Iran along with re-negotiation of trade agreements. Billionaire Wilbur Ross who is joining Trump’s cabinet as Commerce Secretary stated that his team would look at fixing issues related to trade agreements and dumb deals.

3) Declaring China as a currency manipulator

Steven Mnuchin also spoke about enforcing trade regulations with China, He also stated that he would not hesitate in declaring China as a “currency manipulator” if required. President elect Trump had blamed China for stealing American jobs and devaluing its currency during his presidential campaign.

As a Treasury Secretary, Steven Mnuchin will have to make some tough call on Fannie Mae (FNMA) and Freddie Mac (FMCC). Both the GSE enterprises have been transferring their entire profits to treasury.

The job at hand will not be easy for new treasury secretary as he will be have to deal with rising debt, take decision on financing Trump’s fiscal plans which may cause market turbulence.

and the one with Fannie and Freddie

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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