Merging Giants— Who Wins When Fannie Mae And Freddie Mac Become One

-by Jerrad Christian

Billionaire investor Bill Ackman thinks it’s time for Fannie Mae and Freddie Mac to stop playing as two separate government-sponsored enterprises and merge into one. He says it’ll cut mortgage rates, unlock “huge synergies” (Who says that, like it's 1999?) in operations, and bump the trading price. That sounds great if you’re holding a lot of stock. And Ackman is. He’s been invested in both for over a decade.

The Trump administration is already planning to take both companies public again this year, with share sales that could value them at nearly $500 billion combined. The merger Ackman is pushing for would simplify oversight, cut operating costs, and reduce the Federal Housing Finance Agency’s workload to just one institution.

On paper, it’s efficient and on Wall Street, it’s a windfall.But for everyday homeowners the benefits are a lot murkier.

Fannie Mae and Freddie Mac were created by Congress to keep mortgage money flowing and to make home loans more affordable. They buy mortgages from lenders, package them into securities, and sell them to investors— freeing up banks to issue more loans. That’s the theory. The reality is that while these institutions can keep rates lower than the private market would, they also exist in a tight loop with investors who profit from those securities.

A merger could make that loop even tighter. A combined Fannie/Freddie would have unprecedented market power— the kind that lets it dictate terms to lenders and borrowers alike. If you’re a shareholder, that’s great leverage. If you’re trying to buy a home, it’s risky. Fewer competitors in the secondary mortgage market means fewer incentives to innovate or get help for borrowers who don’t fit the perfect credit profile.

Ackman says it’ll lower mortgage rates. But historically, when consolidation cuts costs at the top, those savings don’t often reach the bottom. They get pocketed like every bullshit trickledown story in our history.

The winners are big investors like Ackman, who stand to gain from the IPO and any bump in share price. Certainly the administration, which gets to claim a $500 billion “revival” of two battered institutions from the financial crisis. And let's not forget Fannie/Freddie leadership, who will run the most dominant mortgage-buying operation in history.

For others like first-time homebuyers, who won’t see structural issues like supply shortages or credit access magically fixed by a merger, it doesn't mean anything. Low-income borrowers, whose access depends more on policy mandates than investor-driven efficiencies still won't be able to have a home of their own. And, as always— we taxpayers, who are still the backstop if the merged giant stumbles into another crisis.

We’ve seen this movie before— Banks merge, costs drop on paper, and the market gets more “efficient.” But efficiency for shareholders often means power is concentrated, competition is reduced, and the public takes on more risk without getting a share of the reward.

If you already own a home, maybe nothing changes. If you’re trying to buy one, don’t expect this merger to be your ticket to a lower rate or a fairer shot. The real winners will be the people whose names are already printed on the stock certificates.