Keep up with the news by installing RT’s extension for . Never miss a story with this clean and simple app that delivers the latest headlines to you.

 

Investment group sues US Treasury over Fannie Mae & Freddie Mac bailouts

Published time: July 08, 2013 10:16
AFP Photo / Brendan Smialowski

AFP Photo / Brendan Smialowski

Hedge fund Perry Capital LLC are suing the US Treasury in federal court, claiming the state’s move in seizing all profits from the two government-owned mortgage companies has devastated stock shares.

Filed in the US District Court in Washington on Sunday, the lawsuit alleges that the Treasury’s new amendment of the bailout plan, which enforces a preferred stock purchase agreement, is in violation of a 2008 conservatorship law meant to keep the company afloat with government aid.

“This blatant overreach by the federal government to seize all of the companies’ profits at the expense of the companies and all of their private investors is unlawful and must be stopped,” the official statement claim made by Perry Capital said.

The two mortgage companies owe the US government $187.5 billion for assistance in the 2008 bailout, and have already paid about $132 billion. The US Treasury implemented a third amendment which allows the state to collect all the company profit. As a result, the companies cannot pay back their debt and therefore cannot restore financial health and attract more investors.

President Obama, along with a substantial bi-partisan block of lawmakers, have advocated both mortgage companies be liquidated in the Treasury’s favor, with an expected $200 billion profit transfer to the executive government department.   

 “[The] Treasury’s additional profits from the third amendment are enormous,” Perry Capital said at the court hearing, according to the documented records.

Perry Capital, along with other hedge funds, want Congress to allow Fannie Mae and Freddie Mac to become independent and free from government regulation.

“The third amendment fundamentally and unfairly alters the structure and nature of the securities Treasury purchased,” according to the statement claim.

The new third amendment puts the firms’ day-to-day operations in close watch of the government, which can conflict with shareholder interest.

The lawsuit follows a $41 billion shareholder damages claim made last month by Perry Capital, which alleged similar profit loss due to the US Treasury takeover.

Fannie Mae and Freddie Mac paid the Treasury the biggest dividend in history of $66.3 billion on June 30, according to the claim. Without the third amendment, the Treasury would have collected $4.7 billion, the plaintiffs said.

The lawsuit was filed in the US District Court in Washington, D.C. as Perry Capital LLC v. Jacob J. Lew. 13-cv-01025.

Comments (5)

Anonymous user 10.07.2013 02:22

Cobb County, Georgia could not meet its bond deadlline, so Commissioners extended it.

Anonymous user 09.07.2013 05:24

hard to believe those companies could be profitable, they have a history of falsifying accounting

Anonymous user 09.07.2013 02:24

Get your money out of the banks before they take it.

View all comments (5)
Add comment

Authorization required for adding comments

Register or

Name

Password

Show password

Register

or Register

Request a new password

Send

or Register

To complete a registration check
your Email:

OK

or Register

A password has been sent to your email address

Edit profile

X

Name

New password

Retype new password

Current password

Save

Cancel

Follow us