Moments ago, the stocks of the nationalized GSEs – Fannies and Freddie – tumbled by over 30%, after a federal appeals court upheld a ruling that barred hedge funds from suing to overturn the U. S. government’s 2012 decision to capture billions of dollars in the profits generated by the mortgage guarantors Fannie Mae and Freddie Mac after their bailout.
According to Bloomberg, which first reported the ruling, some Fannie Mae and Freddie Mac investors still have a shot at money damages, based on when they acquired their shares and whether they did so before or after the Federal Housing Finance Agency was created and then imposed its control over Fannie Mae and Freddie Mac. They can pursue breach of contract claims, the appeals panel said in a split 2-1 decision Tuesday.
‘It’s a little too early for me to announce what our response will be other than to say what these breach of contract claims were always the central claims in this case,’ said Hamish Hume, a Washington-based attorney with Boies Schiller Flexner LLP, who represented some of the prevailing shareholders.
This post was published at Zero Hedge on Feb 21, 2017.
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