Following the floundering of Fannie Mae and Freddie Mac in 2008. the government placed them in a conservatorship that was supposed to be temporary and rehabilitative. In a DelwareOnline article, George F. Will explains how these two institutions have recovered, but after seeing their profitability, the government (Department of Treasury) negotiated with the conservator (Federal Housing Finance Agency) to receive 100% of their profits rather than the previous 80%.

Hedge funds assumed that what the government had done (essentially negotiated with itself) would never stand up to legal scrutiny but, not so surprisingly, it has:

A federal judge has sided with the federal government. (See a pattern here?) He made the “utterly astounding” (New York University law professor Richard Epstein’s characterization) judgment -- “without allowing any discovery about the underlying facts” (Epstein) -- that a fiduciary (FHFA) can take private assets of the fiduciary’s supposed beneficiaries and transfer them to the government.

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