Pershing Square Capital Management founder Bill Ackman criticized the government Tuesday night for keeping all the profits made by Fannie Mae and Freddie Mac, calling it "the most illegal act of scale" he's ever seen by the government. The billions in profit from the two government-sponsored companies—which were once bailed out and are still in a state of conservatorship—go straight into the Treasury.

As the largest shareholder of the two mortgage guarantors, Bill and other investors are suing the government for taking property for public use without fair compensation. He believes the government has no chance from a legal point of view, especially because the two companies are so vital to the US economy.

He says the biggest threat to the US middle class is rising rental rates, and not owning a home is having a "floating" roof over your head. "If you don't own a home, and you're a member of the middle class, you have a problem," Bill says. Fannie and Freddie were created to make middle-class housing more accessible with the 30-year, fixed-rate, pre-payable mortgage, he says. [BI]