Question: Does Receivership Risk Still Exist — and Could a “Blue Wave” Reduce It for OTC Common Shareholders?
Hi all — it was good to hear so many F2 questions, including from Horseman Country, during Bill Ackman’s Spaces Q&A. A lot of the discussion around Fannie and Freddie understandably comes back to President Trump, timing, and what a recapitalization, release, or relisting might ultimately look like.
As a common shareholder, here is one concern that has stayed in the back of my mind: why would Treasury exercise warrants for 79.9% and leave existing shareholders with the remaining 20.1% if there is a legal path under HERA that could produce a more favorable outcome for the government by allowing it to capture essentially 100% of the successor equity?
Like many shareholders, I find the lack of action frustrating. But a potential “blue wave” in the 2026 midterms could actually end up being a positive in one respect, because this particular tail-risk scenario could become politically more difficult to pursue.
FHFA’s conservatorship Q&A states: “Although the company can be liquidated as explained above, by statute the charter of the Company must be transferred to a new entity and can only be dissolved by an Act of Congress.”
https://www.fhfa.gov/questions-and-answers-conservatorship
In theory, FHFA could place Fannie and Freddie into receivership under HERA authority, transfer the operating businesses and charters into successor entities, and potentially leave legacy equity with little or no recovery while selling equity in those successors. The companies’ sustained profitability and growing capital buffers make that scenario less intuitive economically, but profitability by itself does not create a statutory prohibition against receivership if another ground under HERA is established.
You might recall that on February 11, 2026, Norbert Michel of the Cato Institute testified before the House Financial Services Committee’s Subcommittee on Housing and Insurance. To clarify, Michel was an outside policy witness, not an FHFA or Trump administration official. Rather than recapitalizing and releasing Fannie and Freddie, Michel stated that FHFA should reinstate the regulatory capital classifications, classify the GSEs as “critically undercapitalized,” and then move them from conservatorship into HERA receivership with the goal of liquidation.
Another thing that gave me pause was Trump’s Truth Social post on August 9, 2025, showing a single “Great American Mortgage Corporation” trading under the MAGA ticker rather than separate Fannie and Freddie listings. It may have been nothing more than branding around an IPO, but given the receivership framework above, it made me wonder whether a combined successor structure has ever been contemplated.
This is why a Democratic takeover of the House in the 2026 midterms could have an unexpected benefit for existing common shareholders, and why the political implications are more nuanced than simply being “bad for F2.” A Democratic House would not eliminate FHFA’s authority under HERA, nor could it simply veto an administrative action that the statute already permits. It could, however, make a controversial receivership strategy much more difficult politically through hearings, subpoenas, investigations, appropriations pressure, and sustained scrutiny of FHFA and Treasury. Divided government could mean a longer wait for a recap and relisting, but it could also reduce the risk that legacy common equity is eliminated entirely.
So a few questions for the community:
- Are you concerned about the possibility of the OTC commons being wiped out, or receiving little to no recovery, through a receivership? What probability would you assign to that scenario?
- And separately, do you think divided government in 2027–2028 would ultimately be good or bad for F2 common shareholders?