Market Insider

Fannie Mae and Freddie Mac shares tank after Mnuchin comments

Steven Mnuchin
Mike Segar | Reuters

Shares of Fannie Mae and Freddie Mac plunged nearly 10 percent during midday trading on Thursday after Steven Mnuchin, Donald Trump's pick for Treasury Secretary, made comments that "there never should be recap and release."

The stocks have since recovered their losses, but were still ended the day more than 4 percent lower.

Recap and release, a recapitalization of the companies followed by releasing them from government control, is a plan supported by several investors who hold shares of the companies.

During Mnuchin's hearing, the former hedge fund manager also called for housing reform and finding a bipartisan solution to create a fix.

"I believe (Fannie Mae and Freddie Mac) are very important entities to provide the necessary liquidity for housing finance. But we need housing reform," Mnuchin said. "We should not just leave Fannie and Freddie as is for the next four years under government control without a fix."

Fannie Mae 5-day performance

Freddie Mac 5-day performance