Billionaire investor Bill Ackman and Michael Burry are urging President Donald Trump to end the government conservatorship of Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC), warning that the ongoing seizure of the companies’ profits is “outright theft” that threatens the stability of the broader U.S. banking sector.

The ‘Net Worth Sweep’ Controversy

In a detailed public statement, Pershing Square's Ackman argued that Fannie Mae and Freddie Mac (F2) have fully repaid their $193 billion government bailout, plus an additional $25 billion.

Despite this, the Treasury continues to hold the original liability on its balance sheets due to the Obama-era “Net Worth Sweep,” a unilateral amendment that directed 100% of F2’s profits to the government.

Ackman condemned the sweep as an unconstitutional maneuver designed to prevent F2 from ever recapitalizing, calling it the “outright theft of the forever profits of both companies.”

He clarified that shareholders are not seeking a handout, but are simply asking the government to honor the original bailout terms and properly account for the $301 billion already repaid.

Systemic Banking Risks

Famed “Big Short” investor Burry amplified the warning, noting that treating F2 shareholders fairly is about “much, much more than these two companies.”

Ackman and Burry warn that violating the hierarchy of claims in a conservatorship permanently damages private market confidence.

“If the government with the stroke of a pen during conservatorship can at a whim wipe out common and preferred shareholders, no one is going to step in to try to save a financial institution that gets into trouble,” Ackman wrote.

He argued this precedent explains why recent failing banks, such as Silicon Valley Bank, could not raise private rescue capital.

A Call To The Administration

The appeal coincides with the Trump administration’s active use of F2 to stabilize the housing market, including a recent directive to buy $200 billion in mortgage-backed securities and a move by the FHFA to ease costly insurance mandates.

Seizing the political moment, Ackman pointed to Trump’s own past statements criticizing the sweep as a “scam” and closed with a pointed call to action: “Now that you have the time, Mr. President, let's Stop the Steal!”

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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