Fannie Mae-No Politics (FNMA)

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Fannie Mae, Freddie Mac Shares Jump After Shareholder Victory -- WSJ

"The most significant thing is that the jury of eight Americans

selected at random recognized that there was something arbitrary,

unreasonable and unjust about the net worth sweep,"

said Hamish Hume, an attorney at Boies Schiller Flexner who

represented shareholders.

5:42 pm ET August 14, 2023 (Dow Jones) By Ben Eisen

Shares of Fannie Mae and Freddie Mac jumped Monday after a Washington D.C.,

jury ruled in favor of stockholders who disputed the government's handling of the

mortgage giants after the 2008 financial crisis.

The jury found that Fannie and Freddie's regulator acted improperly when it directed
the companies to send their profit to the federal government instead of to make
dividend payments to shareholders.

That 2012 decision by the Obama administration, known as the net worth sweep,
came after the mortgage companies failed during the financial crisis and were
placed into conservatorship. It sparked a wave of shareholder litigation,
including a recent case in which the Supreme Court decided against
shareholders
(https://www.wsj.com/articles/supreme-court-issues-mixed-ruling-on-government-seizure-of-fannie-freddie-profits-11624459222).

In the current case, which argued that the net worth sweep was a breach of contract,
the jury awarded shareholders more than $600 million. It was the first win for
shareholders after years of losses.

The award is a small fraction of the hundreds of billions of dollars in profit
(https://www.wsj.com/articles/how-fannie-and-freddie-have-changed-since-the-crisis-11567953001)
that Fannie and Freddie sent to the government. Fannie and Freddie's
regulator may also appeal the decision.

"It's not anything anyone is going to get very excited about," said Christopher Whalen,
chairman of Whalen Global Advisors, a finance and banking consultancy.
"I guarantee it's going to be appealed."

The case has been going on for a decade. A previous trial resulted in a hung jury.
Still, the decision was enough to send Fannie shares up 9% and Freddie shares
up 10%. Both are penny stocks.

"The most significant thing is that the jury of eight Americans selected at random
recognized that there was something arbitrary, unreasonable and unjust about
the net worth sweep," said Hamish Hume, an attorney at Boies Schiller Flexner
who represented shareholders.