A Federal judge late Tuesday threw out a lawsuit brought by investors against the Federal government's control over Fannie Mae and Freddie Mac.
Currently, Fannie and Freddie profits go to the government, and the investors were suing for their perceived share.
The Washington Post provided full coverage and background, via Danielle Douglas-Gabrielle:
The decision arrives more than a year after hedge fund Perry Capital sued the Treasury Department and the Federal Housing Finance Agency, which oversees the government-owned mortgage companies. The fund said they had violated a 2008 law that placed Fannie and Freddie into conservatorship to prevent bankruptcy.
Congress originally authorized Treasury to collect 10% dividend payments from Fannie and Freddie every quarter as a condition of the government’s $188 billion bailout of them. Treasury amended the terms of the agreement in 2012 to make Fannie and Freddie give the government most of their profits, a move known as the “sweep amendment.”
The decision favors the Federal government and its decision to take over the now government-sponsored enterprises.
Tim Pagliara, executive director of Investors Unite, issued the following statement in an email to HousingWire:
"Investors Unite doubts that Congress ever intended for the conservatorship to lead to nationalization of the GSEs with no compensation for shareholders. We disagree with Judge Lamberth's decision and we look forward to reviewing what comes out of discovery in the Fairholme trial."