The morning after for Fannie and Freddie - Cowen puts GSE reform odds at 65%

|About: Fannie Mae (FNMA)|By:, SA News Editor

Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) each blasted off by more than 45% following yesterday's selection of Steven Mnuchin to be Treasury Secretary, and his promise to get the government out of the companies.

With Mnuchin at Treasury, Jeb Hensarling chairing the House Financial Services Committee, and a new Senate Banking chairman supporting GSE reform, Cowan's Jaret Seiberg puts the odds of something getting done in the next two years at 65%.

Seiberg notes Mnuchin "knows" investors who are suing the government over the profit sweep, and understands the debates "subtleties" better than most.

There will be the usual media hysterics about enriching supporters, but the new president is less concerned than most with answering to that crowd, says Seiberg.

There are, however, "serious obstacles," including conservatives who view the GSEs as "an abomination," and would have them liquidated.

Source: Bloomberg