The U.S. Supreme Court on Monday declined to again hear a multi-billion dollar case pursued by shareholders of Fannie Mae and Freddie Mac arising from the federal government's takeover of the mortgage finance firms during the 2008 financial crisis.
The justices turned away an appeal by the investors of a lower court's ruling against their challenge to a 2012 agreement that resulted in hundreds of billions of dollars being redirected from Fannie Mae and Freddie Mac to the U.S. Treasury. The shareholders had argued that this arrangement unlawfully deprived them of dividends without compensation.
Fannie and Freddie were created by Congress and operate as for-profit corporations with private shareholders, with the mission of expanding the national home lending market by buying home loans from private lenders and repackaging them as mortgage-backed securities. The case before the Supreme Court arose from of a myriad of lawsuits that private shareholders filed over the 2012 agreement between the U.S. Treasury and the FHFA aimed at repaying the government for the bailout.
The latest case concerned shareholder claims that the agreement, called the "net worth sweep," violated the U.S. Constitution's Fifth Amendment requirement that the government provide "just compensation" when private property is taken for public use.
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