Judge throws out suit over Fannie, Freddie profits

by Ryan Smith01 Oct 2014
A federal judge has thrown out a lawsuit that sought to prevent the government from forcing Fannie Mae and Freddie Mac to turn over their profits to the Treasury.

Fannie and Freddie were taken into conservatorship by the federal government after teetering on the bronk of collapse in 2008. Under the terms of the deal, the companies had to turn all their profits over to the Treasury as dividends. Although Fannie and Freddie have now paid back the $187.5 billion they received from the government, the deal still stands. This is understandably a sticking point with investors who bought stock in the company.

The lawsuit, filed by Perry Capital, Fairholme Funds Inc. and Arrowood Indemnity Company, argued that “blatant overreach by the federal government to seize all of the companies' profits at the expense of the companies and all of their private investors is unlawful and must be stopped.”

But today the court ruled against the plaintiffs, saying that Congress had given the Treasury and the Federal Housing Finance Agency the power to take profits from Fannie and Freddie as part of the Housing and Economic Recovery Act. According to the court, “unambiguous” provisions of the law compelled the dismissal.


  • by Dan | 10/1/2014 11:40:14 AM

    Makes one wonder if the law was written that way allow the confiscation of profits by our leaders - therefore the court has to rule they way it did. Don't you think the ruling should have been the other way around, since the law is not clear! Just saying.....

  • by | 10/1/2014 12:08:09 PM

    I thought that the ruling stated that the law IS clear. And I 'd like to know more about where the profits will be used. Going to do some research here.

  • by Jim | 10/1/2014 2:52:40 PM

    If the judge says the law is unambiguous, he means it is clear. If Congress passed a law to take the profits, then the judge is saying Congress can pass a law to take the profits. I truly wish this could be shown as unconstitutional. This is the type of Judge that believes the Constitution is "a living a breathing document," so Congress can do anything, or is it that since Congress chartered the GSE's, they can do what they want with them?

    It seems like an infringement of us private stock holders. I guess they can say you would have no stock value at all if the government did not step in to save them. We private stock holders lost our ownership rights at that point?


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