Lawyers for investors in Fannie Mae and Freddie Mac asked a federal appeals court to at least revive their claims that the U.S. stripped the companies of billions of dollars of profits, depriving shareholders of dividends, if not to go further and rule the transfer of profits to the government was unlawful. When or if any reversal or affirmation on prior rulings would occur is unknown.
Bloomberg contributor Andrew M. Harris notes that government attorneys countered that the Federal Housing Finance Agency, which has effectively controlled the mortgage giants since their 2008 bailout, was acting within the authority it was granted by Congress when it implemented the so-called net worth sweep in 2013 that sent the companies’ profits to the U.S. Treasury Department. Harris writes:
The appellate argument capped a tumultuous week for Fannie Mae and Freddie Mac. Shares of the government-sponsored enterprises, or GSEs, climbed more than 40 percent at midweek after the judge in a related case decided to unseal evidence the investors’ lawyers sought to cite before the panel. By today, Freddie Mac shares were up about 25 percent and Fannie Mae about 30 percent.