No, You Don't Need an Act of Congress to Free Fannie and Freddie (and Who Cares About the Common)

If you're new here: I'm Glen Bradford. I'm long Fannie Mae and Freddie Mac junior preferred shares — most of my net worth, not a side bet — and I've written the full Fanniegate thesis for years. This is analysis and opinion, not advice. I hold what I write about.

If you're back: a popular account calling himself a "GSE Advocate" has been making the rounds telling people the insiders think it's a coin toss, that Pulte has no influence, that Trump is distracted, and that you'd better settle in for "a few more years" because it'll take an act of Congress. I'll take the other side of that, and I'll tell you exactly why I'm not worried.

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First, the honest part: where the bear is actually right

Let me not bury it. The "GSE Advocate" take has one true leg under it: Congress really is drafting legislation to end the conservatorship. That part is real, and I'm not going to pretend otherwise.

• Rep. Scott Fitzgerald told a House Housing & Insurance subcommittee a bill to end the conservatorship is coming "in the coming weeks."
• French Hill has a bill laying out a path to the same place.
• The End of GSE Conservatorship Preparation Act (H.R. 1209) is already on the board.
• And Trump has floated a roughly $30 billion IPO that could value the two companies near $500 billion.

So when he says "it's being drafted as I type," he isn't making it up. Here's the problem: that's an argument against his own conclusion. If nothing is happening, why is Washington this busy?

The leap that doesn't hold: "therefore you need Congress"

The bear takes "Congress is drafting a bill" and lands on "therefore release requires Congress and you wait years." That's the leap, and it's wrong.

Ending the conservatorship is something Treasury and FHFA can do administratively by amending the PSPAs. We have the precedent from the 2021 amendments. The legislation moving through Congress is a parallel track, not a gate. My read is that a bill gets signed by the President either just ahead of the administrative action or as part of it — Washington likes to put its name on the win — but the legislation is the bow on the package, not the engine. The engine is the administrative path, and that is the track in motion right now.

The red herring everyone hides behind: the explicit guarantee

Here's the part that actually matters, and almost nobody says it plainly.

The whole "we need Congress" posture leans on one specific thing: an explicit, unlimited, security-level federal guarantee of GSE mortgage-backed securities. That's the centerpiece the 2019 Treasury Housing Finance Reform Plan teed up as the ideal end state, the kind of backstop only Congress can formally authorize. And it is exactly what the Mortgage Bankers Association and the too-big-to-fail banks have spent years insisting must come first — which has conveniently doubled as a reason to keep the companies stuck in limbo.

My honest take: they never get it.

That explicit, unlimited guarantee dies a quiet, lonesome death in the years after the administrative action. Release does not wait for it, because release never actually needed it. The implied guarantee the market already prices does the job it has always done. The lobby that built its entire delay strategy on "no explicit guarantee, no release" is about to watch release happen without their guarantee. That fight isn't a precondition. It's a sideshow that loses.

Now the part people actually want: the trade

Forget the common. I mean it.

Treasury holds warrants for 79.9% of the common stock. Stack that on top of converting the senior preferred — whose liquidation preference is already up around $234 billion as of mid-2026 — plus a fresh equity raise, and the common gets diluted into oblivion. Even the sharper skeptics get this right by accident. One of them put it perfectly the other day: "they will act, and if you own the common you will still lose."

Correct. But that's not a bear case. That's the bull case for the preferred.

The junior preferred have something the common does not: a par anchor. A fixed liquidation preference, trading at a discount, with a clean path to being reinstated or made whole as the capital structure gets rebuilt. When the priority of claims actually matters again — and in a recapitalization, it always does — the preferred sit in the right seat. That is the whole point here. Who cares about the common. The preferred are going to do just fine.

Bottom line

This isn't a coin toss, and it isn't an "indefinite wait." It's a process already underway, on a track that doesn't need the one thing the bears insist it needs, ending in a capital structure where the preferred win. The explicit guarantee the banks keep demanding isn't the gate — it's the thing that quietly never arrives.

Focus on the positives. There are a lot of them.

Disclosure: I own Fannie Mae and Freddie Mac junior preferred shares. This is my opinion and analysis, not investment advice. Do your own work.