The Big Idea
Fannie Mae and Freddie Mac moves raise new questions
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.
Changes at Fannie Mae and Freddie Mac in the last week to boards of directors and senior management have raised questions about plans for the organizations, with possibilities ranging from simple cost reduction to eventual restructuring or beyond. Both organizations appointed senior officials of their regulator, the Federal Housing Finance Agency, and trimmed board size. Freddie Mac also parted with several senior executives. Neither organization offered explanations for the moves. But with both playing major roles in the MBS, agency debt and interest rate derivatives markets, investors are watching closely.
Significant changes in the last week
Both organizations on March 17 appointed William J. “Bill” Pulte, recently confirmed as director of the FHFA, to board chair and Clinton Jones, general counsel of FHFA, as a director. The Pulte appointment is surprising in light of statute stipulating that the director may not “hold any office, position, or employment in any regulated entity or entity-affiliated party.”
Fannie Mae at the time also appointed Christopher Stanley, an engineer at SpaceX and at the social media site X and a member of Elon Musk’s Department of Government Efficiency. But Stanley resigned from the board a day later.
Based on board members appointed and removed on March 17, the Fannie Mae board dropped from 13 to 9 members and the Freddie Mac board from 12 to 10 (Exhibit 1).
Exhibit 1: Fannie Mae, Freddie Mac board changes disclosed March 17
Source: Fannie Mae, Freddie Mac, SEC, Bloomberg, Santander US Capital Markets.
Freddie Mac also announced the departures of several senior executives this week. On March 17, it parted with Executive Vice President of Corporate Strategy and External Affairs Craig Phillips, hired in January. On March 20, it parted with Chief Executive Officer Diana Reid, hired last September, and with Head of Human Resources Dionne Wallace Oakley
No clarity on rationale
Neither Fannie Mae, Freddie Mac or FHFA gave reasons for the changes.
Many fixed income investors have focused on the possibility that the new administration will restructure Fannie Mae and Freddie Mac in some way, including privatizing the organizations that have been in federal conservatorship since 2008. The hurdles to privatizing Fannie Mae and Freddie Mac are complex.
FHFA Director Pulte recently told CNN that he’s in no rush to privatize Fannie Mae and Freddie Mac. “Fannie and Freddie shouldn’t be in conservatorship forever,” Pulte told CNN on March 13, the day he was confirmed. “But it’s critical to ensure any discussion about exiting conservatorship needs not only to ensure safety and soundness but how it would affect mortgage rates.” (More here.)
The appointment of Pulte as chair and Jones as director on both the Fannie Mae and Freddie Mac boards, if those hold, clearly gives the FHFA more direct control over any decisions that need board approval. That could include efforts to combine operations or even merge the entities. Either operating joint ventures or a merger could reduce costs while preserving the implied government guarantee, and the liquidity and consistency of the UMBS and TBA markets. With general and administrative costs at the enterprises running around 6 bp to 7 bp on the roughly $6.6 trillion principal balance of outstanding MBS, small reductions could save hundreds of millions if not billions of dollars annually.
More direct control could also make it easier to execute an idea recently raised by US Treasury Secretary Scott Bessent. As reported by Inside Mortgage Finance, Bessent, speaking on a podcast, recently suggested that Fannie Mae and Freddie Mac could be part of a sovereign wealth fund that the administration is designing.
This material is intended only for institutional investors and does not carry all of the independence and disclosure standards of retail debt research reports. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This message, including any attachments or links contained herein, is subject to important disclaimers, conditions, and disclosures regarding Electronic Communications, which you can find at https://portfolio-strategy.apsec.com/sancap-disclaimers-and-disclosures.
Important Disclaimers
Copyright © 2025 Santander US Capital Markets LLC and its affiliates (“SCM”). All rights reserved. SCM is a member of FINRA and SIPC. This material is intended for limited distribution to institutions only and is not publicly available. Any unauthorized use or disclosure is prohibited.
In making this material available, SCM (i) is not providing any advice to the recipient, including, without limitation, any advice as to investment, legal, accounting, tax and financial matters, (ii) is not acting as an advisor or fiduciary in respect of the recipient, (iii) is not making any predictions or projections and (iv) intends that any recipient to which SCM has provided this material is an “institutional investor” (as defined under applicable law and regulation, including FINRA Rule 4512 and that this material will not be disseminated, in whole or part, to any third party by the recipient.
The author of this material is an economist, desk strategist or trader. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM or any of its affiliates may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This material (i) has been prepared for information purposes only and does not constitute a solicitation or an offer to buy or sell any securities, related investments or other financial instruments, (ii) is neither research, a “research report” as commonly understood under the securities laws and regulations promulgated thereunder nor the product of a research department, (iii) or parts thereof may have been obtained from various sources, the reliability of which has not been verified and cannot be guaranteed by SCM, (iv) should not be reproduced or disclosed to any other person, without SCM’s prior consent and (v) is not intended for distribution in any jurisdiction in which its distribution would be prohibited.
In connection with this material, SCM (i) makes no representation or warranties as to the appropriateness or reliance for use in any transaction or as to the permissibility or legality of any financial instrument in any jurisdiction, (ii) believes the information in this material to be reliable, has not independently verified such information and makes no representation, express or implied, with regard to the accuracy or completeness of such information, (iii) accepts no responsibility or liability as to any reliance placed, or investment decision made, on the basis of such information by the recipient and (iv) does not undertake, and disclaims any duty to undertake, to update or to revise the information contained in this material.
Unless otherwise stated, the views, opinions, forecasts, valuations, or estimates contained in this material are those solely of the author, as of the date of publication of this material, and are subject to change without notice. The recipient of this material should make an independent evaluation of this information and make such other investigations as the recipient considers necessary (including obtaining independent financial advice), before transacting in any financial market or instrument discussed in or related to this material.
Important disclaimers for clients in the EU and UK
This publication has been prepared by Trading Desk Strategists within the Sales and Trading functions of Santander US Capital Markets LLC (“SanCap”), the US registered broker-dealer of Santander Corporate & Investment Banking. This communication is distributed in the EEA by Banco Santander S.A., a credit institution registered in Spain and authorised and regulated by the Bank of Spain and the CNMV. Any EEA recipient of this communication that would like to affect any transaction in any security or issuer discussed herein should do so with Banco Santander S.A. or any of its affiliates (together “Santander”). This communication has been distributed in the UK by Banco Santander, S.A.’s London branch, authorised by the Bank of Spain and subject to regulatory oversight on certain matters by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The publication is intended for exclusive use for Professional Clients and Eligible Counterparties as defined by MiFID II and is not intended for use by retail customers or for any persons or entities in any jurisdictions or country where such distribution or use would be contrary to local law or regulation.
This material is not a product of Santander´s Research Team and does not constitute independent investment research. This is a marketing communication and may contain ¨investment recommendations¨ as defined by the Market Abuse Regulation 596/2014 ("MAR"). This publication has not been prepared in accordance with legal requirements designed to promote the independence of research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The author, date and time of the production of this publication are as indicated herein.
This publication does not constitute investment advice and may not be relied upon to form an investment decision, nor should it be construed as any offer to sell or issue or invitation to purchase, acquire or subscribe for any instruments referred herein. The publication has been prepared in good faith and based on information Santander considers reliable as of the date of publication, but Santander does not guarantee or represent, express or implied, that such information is accurate or complete. All estimates, forecasts and opinions are current as at the date of this publication and are subject to change without notice. Unless otherwise indicated, Santander does not intend to update this publication. The views and commentary in this publication may not be objective or independent of the interests of the Trading and Sales functions of Santander, who may be active participants in the markets, investments or strategies referred to herein and/or may receive compensation from investment banking and non-investment banking services from entities mentioned herein. Santander may trade as principal, make a market or hold positions in instruments (or related derivatives) and/or hold financial interest in entities discussed herein. Santander may provide market commentary or trading strategies to other clients or engage in transactions which may differ from views expressed herein. Santander may have acted upon the contents of this publication prior to you having received it.
This publication is intended for the exclusive use of the recipient and must not be reproduced, redistributed or transmitted, in whole or in part, without Santander’s consent. The recipient agrees to keep confidential at all times information contained herein.
