Fannie Mae-No Politics (FNMA)

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Hedge Fund Perry Capital LLC initially filed the case in the United States District Court in the District of Columbia challenging the decision of the U.S Treasury Department and Federal Housing Finance Agency (FHFA) with regard to the profit sweep. The lawsuit states that the government violated terms of the 2008 bailout agreement.

According to the lawsuit, the Treasury department did not have the authority with respect to dividend sweep for purchase of new securities at the beginning of 2010 as per HERA. The FHFA also failed to conserve assets of Fannie Mae (FNMA) and Freddie Mac (FMCC) as a conservator.

Initial Case with Judge Lamberth in US District Court for the District of Columbia

The case was initially heard by Judge Lamberth. Judge Lamberth granted the governments motion to dismiss dealing the plantiffs a large blow and sending shares plummeting on September 30, 2014. While the decision was negative for shareholders, Judge Lamberth provided some opening for the plaintiffs stating that he believed that takings were not ripe. He also questioned the Housing and Economic Recovery Act of 2008 (“HERA”) and asked whether it was unconstitutional, despite ruling for the government.

Lamberth motion to dismiss: http://gselinks.com/Court_Filings/Perry/13-cv-01025-0051.pdf