The US Treasury secretary called for the immediate recapitalisation of Fannie Mae and Freddie Mac, the two institutions which guarantee most US mortgages, in what the Trump administration pitched as a first step to free them from public control.

Steven Mnuchin on Thursday launched his plan for returning Fannie and Freddie to private ownership, over a decade after they were bailed out at the height of the financial crisis.

Mr Mnuchin said his plan would not imperil the 30-year fixed-rate mortgage, the wide availability of which has been made possible by the government guarantees offered by Fannie and Freddie.

However, it does involve asking Congress to write new rules for how the two organisations would be run under private ownership, something experts say is unlikely to happen while the Senate and House of Representatives are under the control of different parties.

The Treasury secretary also recommended taking a series of steps which do not require legislation, but which he said would help pave the way for their eventual privatisation.

They include changing the rules of the two organisations so they can keep more of their own profits, rather than returning so much to the government as they have had to do under the terms of their bailout. Recapitalising them in this way could make their shares more attractive to investors in a privatisation, advocates say.

Several hedge funds have big positions in the minority of shares not owned by the government and have been advocating re-privatisation for years.

Mr Mnuchin said in a statement: “The Trump administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home. An effective and efficient federal housing finance system will also meaningfully contribute to the continued economic growth under this administration.”

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Via Financial Times