The Supreme Court declined Tuesday to hear appeals from investors in Fannie Mae and Freddie Mac that their rights were infringed by the terms of the bailouts of the government-sponsored enterprises.
Instead, a federal appeals court’s ruling against shareholding lawsuits last year will remain in place.
Several big investors, including Perry Capital and Fairholme Funds, had sought to have the Supreme Court revisit the case over the 2012 decision by the Treasury to sweep up all of Fannie and Freddie’s profits, not allowing the bailed-out entities to retain earnings and build up capital. Investors in the companies argued that the decision by the Obama Treasury violated the terms of the 2012 bailout.
Altogether, Fannie and Freddie have taken over $191 billion from the government since failing during the housing crisis, including draws required this past month thanks to accounting losses prompted by the new tax cuts.
In recent years, though, the two government-sponsored enterprises have seen their finances improve, and have sent $279 billion in aggregate to the Treasury. Shareholders have argued that the Treasury wasn’t entitled to all those earnings.
