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Investors in Fannie Mae and Freddie Mac argued an appeal attempting to further their case that the US government stole billions in profits from the two GSEs when it took them over during the 2008 crisis—a claim that lower courts decided against in 2014.
However, government attorneys say the Federal Housing Finance Agency was—and is—acting within its rights, reminding investors that the GSEs would've gone under without the government’s $190B cash infusion during the financial crisis.
According to the investors' claim, the government's takeover of the two mortgage giants deprived shareholders of dividends, suggesting the court should rule the transfer of profits as "unlawful," Bloomberg reports.
“The net worth sweep was a massive, and we submit lawless, expropriation of Fannie Mae and Freddie Mac,” which made them insolvent “zombies,” said Theodore Olson, arguing on behalf of the hedge funds.
A three-judge panel in DC listened to three hours of argument, and as of now they've offered no indication of when or how they will rule. [Bloomberg]
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