Trump met Citi, BofA CEOs to discuss plans for Fannie and Freddie, sources say

By Tatiana Bautzer, Saeed Azhar and Pete Schroeder

NEW YORK (Reuters) -U.S. President Donald Trump met the CEOs of Citigroup (C/PN) and Bank of America (BAC) on Wednesday to discuss the administration's plans to privatize U.S. mortgage financing companies Fannie Mae and Freddie Mac, according to two sources familiar with the situation.

Citi CEO Jane Fraser met with Trump at the White House, said one of the sources, who declined to be identified discussing a private meeting. Trump also met BofA CEO Brian Moynihan and his team, a second source said.

The White House declined to comment on private meetings.

The Trump administration plans to take both firms public and is asking for pitches from the largest banks. The president plans to privatize the mortgage companies, potentially with a large share offering. But in social media posts in May, Trump said he intends to keep government mortgage guarantees and oversight.

The meetings follow those held in late July with other bank leaders, including Goldman Sachs CEO David Solomon, the second source said.

Fannie Mae and Freddie Mac have been under federal conservatorship since 2008 following the financial crisis, during which both entities became insolvent amid the subprime mortgage meltdown.

Since then, the companies have rebuilt capital reserves, repaid their Treasury loans and returned to consistent profitability. Shares of both firms, currently traded on over-the-counter markets, have surged amid speculation over privatization plans.

The pair guarantee over half of the nation's mortgages.

Taking the firms public would end a far-reaching government backstop that was intended to be a temporary reprieve, but could also make mortgages pricier and harder to obtain if the entities guaranteeing fully return to the private sector.

Analysts noted that while Trump has been willing to risk economic turmoil in his wide-ranging tariff agenda, there may be more sensitivity to drama in mortgage rates, which are highly visible and familiar to many consumers.

"Tariffs may have impacted the stock market, but they did not result in immediate price hikes at Walmart or Dollar General," wrote TD Cowen analyst Jaret Seiberg in a May note. "By contrast, the price of mortgages will respond to each recap and release development. That makes the political cost more immediate. It is why we expect a slower and more deliberative process."

(Reporting by Tatiana Bautzer and Saeed Azhar in New York, Pete Schroeder in Washington; additional reporting by Andrea Shalal; Editing by Lananh Nguyen and Chris Reese)