Among those present at the dinner were two of the Trump administration’s own cohort of nine billionaires (Commerce Secretary Howard Lutnick and SBA Administrator Kelly Loeffler), plus the half-billionaire Treasury Secretary Scott Bessent and Federal Housing Finance Agency Director Bill Pulte. whose late grandfather was a billionaire. The highlight of this fancy soirée (crystal, china) occurred during cocktail hour, when Bessent said to Pulte: “I’m gonna punch you in your fucking face.”
Bessent’s anger management challenges are wildly entertaining, and I yield to no one in my unseemly interest. But mostly lost in the gleeful coverage of the nearly-thrown hands was the ultimate reason for Bessent’s bitter rivalry with Pulte, whose job title should rank him well below Bessent in the pecking order. The two men are locked in a dispute over who will control the planned privatization of Fannie Mae and Freddie Mac, the two government-sponsored enterprises that back 70 percent of all United States mortgages. At the moment, Pulte is winning, and that pisses Bessent off. But the larger truth is that privatizing Fannie and Freddie would make mortgages costlier and benefit mainly a select group of wealthy investors--especially Trump’s new best friend Bill Ackman.
According to Politico, Bessent said to Pulte as hors d’oeuvres were being served, “Why the fuck are you talking to the president about me? Fuck you! I’m gonna punch you in your fucking face.” Bessent then said to the club’s co-owner, Omeed Malik, “It’s either me or him. You tell me who’s getting the fuck out of here. Or, we could go outside.”
“No. I’m going to fucking beat your ass.”
It’s highly plausible that Pulte was talking shit about Bessent to Trump because Pulte talks shit about a lot of people to Trump, either directly or through his Twitter/X feed, which has three million followers. (Bessent has only 638,100.) Like Laura Loomer, Pulte appears to have adopted as his role model Madame Defarge, the vindictive informer who brings her knitting to beheadings in A Tale of Two Cities.
“If somebody is claiming two primary residences,” Pulte has said, “that is not appropriate, and we will refer it for criminal investigation,” And indeed, the Justice department is investigating Cook, James, and Schiff. But according to Reuters, only once in the past eight years has the federal government prosecuted this as a stand-alone offense. If it’s a fireable offense for Cook, ProPublica pointed out last week, then Trump is obliged also to fire three members of his Cabinet who did the same thing: Labor Secretary Lori Chavez-DeRemer, Transportation Secretary Sean Duffy, and Environmental Protection Agency director Lee Zeldin. These three should also get criminal referrals to the Justice Department, along with Texas attorney general Ken Paxton and Pulte’s own father and stepmother.
We don’t know whether or how Pulte bad-mouthed Bessent to Trump, but we do know why he might do so. The two are supposed to be working together on Trump’s promised plan to privatize Fannie Mae and Freddie Mac, the two big government entities that bundle mortgages into securities, and Bessent is getting in Pulte’s way.
Pulte wants to move fast to sell off a reported 5 percent of government-owned shares. This would generate a reported tens of billions in savings at a time when the multi-trillion-dollar tax giveaway in Trump’s One Big Beautiful Act has the president searching under couch cushions for nickels. Bessent wants to move more cautiously, mindful that there are many moving parts and that a housing crisis (Bessent says Trump may declare it a national emergency) is an awkward time to fiddle with mortgage guarantees.
The truth is that privatizing Fannie and Freddie is, as noted by Bharat Ramamurti of the nonprofit American Economic Liberties Project, “a solution in search of a problem.” Fannie and Freddie are running quite well today—and certainly better than before the 2008 housing crisis, when they were private companies. Fannie and Freddie’s reckless investment in subprime mortgage-backed securities sent them into a tailspin, prompting Congress put them in conservatorship. Government ownership was no big deal, really; Fannie and Freddie, created by Congress in 1938 and 1970, respectively, have experimented with various structures over the years as public, semi-public, and private enterprises.
When you “make clear” that you’ll keep an “implicit guarantee,” then the guarantee is no longer implicit; it’s explicit. Which is fine if Fannie and Freddie remain part of the government, but not so fine if we invite private investors to assume full control of the company. As Bob Kuttner pointed out recently, that would be “privatizing speculative gain” and “socializing risk,” which gives you the worst of both worlds.
Or, in the case of billionaire Bill Ackman, more rich. Ackman owns about 10 percent of this common stock—he calls it “a lottery ticket in the drawer”--and he’s the lead oligarch arguing for privatization. A week before the inauguration he presented his own plan for privatizing Fannie and Freddie. He titled it “The Art of the Deal.” In it, Ackman argues, among other things, that the capital requirements for Fannie and Freddie are too high, which is what you’d expect someone to say about a pot of money that’s backed by the federal government.
To Ackman’s mind, this is terribly unfair. Why should the government extract so much more profit as the price of a bailout than it did for these other companies? But the flip side is that Fannie and Freddie have turned out to be fabulous investments for the United States taxpayer. And anyway, I thought Trump these days was all about government acquiring shares in private companies (U.S. Steel, Nvidia, MP Minerals, Intel), not selling them off.
Why on earth, apart from wanting to make Ackman wealthier still, would we get rid of these public investments in a garage sale?
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