Photographer: James MacDonald/Bloomberg Supreme Court Rejects Hedge Funds on Fannie, Freddie Suits By Greg Stohr 20. Februar 2018, 15:32 MEZ
The U.S. Supreme Court refused to revive core parts of lawsuits filed by hedge funds over the federal governments capture of billions of dollars in profits generated by Fannie Mae after Freddie Mac after their bailout.
The justices without comment rejected appeals filed by Perry Capital LLC, Fairholme Funds and other big investors. The rebuff left intact a federal appeals court ruling that sent Fannie and Freddie shares plunging a year ago.
The disputed move, known as the net-worth sweep, forced the mortgage guarantors to send almost all their profits to the U.S. Treasury, leaving the companies with nothing. The companies have been under government control since being bailed out during the 2008 financial crisis.
The appeals court ruling said a 2008 law barred federal judges from hearing most shareholder claims over the bailout. The law created the Federal Housing Finance Agency, which became the conservator of the two companies and was largely insulated from legal claims.
The ruling said the funds could pursue some contract-based claims before a federal judge in Washington.
The net worth sweep, in place since January 2013, let the U.S. recapture even more than the $187 billion in taxpayer money it spent to stave off the companies collapse. The hedge funds say the government has seized $130 billion more than it had previously been entitled to.
Fannie Mae and Freddie Mac provide housing-market liquidity by buying mortgages, then bundling them into securities on which they guarantee payments of principal and interest.
The cases are Cacciapalle v. Federal Housing Finance Agency, 17-578; Perry Capital v. Federal Housing Finance Agency, 17-580; and Fairholme Funds v. Federal Housing Finance Agency, 17-591.
|