America's Great Mortgage Unwinding: A Potential Opportunity for the Patient Investor
A Reluctant Farewell to State Control
Sixteen years. In the world of finance, that’s an eternity. It’s long enough for entire market cycles to live and die, for fortunes to be made and lost. And for sixteen long years, America’s two mortgage giants, Fannie Mae and Freddie Mac, have been wards of the state, operating under the thumb of the US Treasury. I think we can all agree that when the government gets involved in running a business, efficiency isn’t usually the first word that springs to mind.
These behemoths were taken into conservatorship back in 2008 to stop the entire American housing market from imploding. A necessary evil, perhaps. But now, after funnelling billions in profits back to the taxpayer, Washington seems ready to finally cut them loose. We’re talking about what could be the largest privatisation in US financial history. The combined value of these entities might top $500 billion once they are set free. That’s a colossal sum of capital that has been locked away from private investors for a generation, and its release could cause some serious waves.
