Key facts
- Shareholder Jon Oksenholt proposed a new structure for Fannie Mae and Freddie Mac.
- The plan involves creating a Texas holding company, U.S. Financial Technology and Mortgage Corp. (USFTMC).
- USFTMC would issue a single publicly traded security.
- The structure aims to preserve the existing charters, capital, and missions of Fannie Mae and Freddie Mac.
- The proposal anticipates a 'capital reset' and a primary capital raise.
- The plan is presented as an alternative to ending the conservatorships of the GSEs.
Shareholder Jon Oksenholt of Oksenholt Capital Management has put forth a novel proposal to restructure Fannie Mae and Freddie Mac, aiming to resolve the protracted debate over ending their conservatorships. His plan involves establishing a new Texas-based holding company, U.S. Financial Technology and Mortgage Corp. (USFTMC), which would issue a single publicly traded security. This structure would house two separately chartered mortgage guarantors and a shared technology platform, U.S. FinTech LLC, which operates the Common Securitization Platform (CSP).
Oksenholt argues that this model would preserve the existing charters, capital structures, and missions of Fannie Mae and Freddie Mac while allowing U.S. FinTech to develop into a more valuable commercial entity. Investors would benefit from a single security reflecting the entire platform's value. He contrasts this with a conventional exit from conservatorship, which he believes would leave investors with disparate assets and an under-monetized technology platform. The proposal also avoids a full merger, which he suggests would face greater legal challenges due to the enterprises' separate congressional charters.
The plan estimates an initial equity value of approximately $500 billion for the combined platform, with a potential to reach $1 trillion through earnings growth, synergies, and a higher valuation multiple. It assumes a 'capital reset' to address existing agreements with the U.S. Department of the Treasury and the Federal Housing Finance Agency (FHFA), including the Preferred Stock Purchase Agreements (PSPAs) and warrants. A primary capital raise at the holding company level would be anticipated to meet capital requirements for release from conservatorship.
This proposal emerges as the Trump administration continues to evaluate its options regarding the government-sponsored enterprises (GSEs). President Donald Trump has previously indicated that his administration was still considering a public offering for Fannie Mae and Freddie Mac.