Fannie Mae and Freddie Mac: A Debate That Won’t Die

During his campaign, the president-elect made it known that he wants to privatize Fannie Mae and Freddie Mac, removing them from government conservatorship. Whether that means a new IPO or handing them back to old shareholders who lost money during the crisis? No one knows.

This topic is creeping back into the headlines more often than I’d like—almost rivaling my disdain for discussing Wells Fargo. Treasury Secretary nominee Steven Mnuchin fanned the flames by saying, “It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.”

Actually—it does make sense.

Here’s the short version:
During the 2008 financial crisis, the government bailed out Fannie and Freddie in exchange for control. Since turning profitable in 2012, these companies have returned over $60 billion more than the original bailout—making it a smart deal for taxpayers.

Now that the companies are in the black, two main arguments for privatization have surfaced—both weak:

1. Old shareholders want their money back. But investing carries risk, and that risk didn’t pay off. It’s not the government’s job to fix failed bets.

2. Taxpayers could be on the hook in another crisis. But the government has already collected over $130 billion. If any is needed back, that’s not a new bailout—it’s a return of profits.

Bottom line? Keeping the companies under government control is still the most logical path forward—for taxpayers, not speculators.

Wells Fargo: Arbitration, Avoidance, and Accountability

It’s only fitting to talk Fannie and Freddie in the same breath as Wells Fargo—another long-running saga. The New York Times recently highlighted how the bank has sidestepped accountability for its fake account scandal using arbitration clauses.

Here’s the issue: Most financial agreements include a clause requiring disputes to be settled through arbitration—usually cheaper than court. But with large institutions like Wells Fargo, this tactic blocks class-action lawsuits, making it costly and difficult for customers to seek justice individually.

A striking example:
In 2009, when banks faced lawsuits over unfair overdraft fee practices, most settled. Wells Fargo fought the case in court for a year, then pivoted to arbitration. The case is still open today.

Here’s where it gets worse:
Many of the affected customers never agreed to these fake accounts—and didn’t knowingly sign any arbitration clauses. Still, Wells argues that any prior agreement with the bank covers all accounts—even fraudulent ones.

Judges are split. But morally? Forcing arbitration on someone for an account they never asked for is a reach. If you’re a Wells Fargo employee, maybe just tell people you’re in competitive arm wrestling this holiday season—less controversial.

JP Morgan: “Sons and Daughters” and the Cost of Corruption

Let’s not leave JP Morgan out of the fun. The bank just paid $264 million to settle charges with the SEC, DOJ, and Federal Reserve over a “Sons and Daughters” hiring program.

The program did exactly what it sounds like—gave jobs to children of Chinese government officials to win business. One email even read:

“Blink blink nod nod, can we find a place for his son…?”
A poor attempt at “wink wink, nudge nudge”—and an even worse thing to put in writing.

What’s notable is that JPMorgan wasn’t fined for hiring client’s kids—just government officials’ kids, a direct violation of the Foreign Corrupt Practices Act. In China, where many corporations are state-owned, this crosses an especially clear line.

Sure, relationship-building and favors are part of business. But when you’re keeping spreadsheets of favors traded and expecting ROI, that’s not networking—it’s bribery. It’s the difference between helping a friend move and logging their debt in Excel.

Final Thoughts:
There are plenty of reasons to be skeptical of the big banks right now. Between shady arbitration clauses, political hiring practices, and absurd shareholder expectations, the finance world never fails to provide content worth ranting about.

Let’s just hope your holiday dinner table is banker-free.

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