The lawsuit, filed in U.S. District Court in Washington, alleges that the Treasury and the regulator for Fannie Mae and Freddie Mac violated a 2008 law that put the two mortgage companies into conservatorship as they faced insolvency at the height of the U.S. financial crisis.HAHAHAHAHAHAHA! "Rule of law!" That's a good one!
The Treasury Department amended the bailout terms last year, forcing Fannie Mae and Freddie Mac to hand over most of their profits to the government, replacing a requirement that the companies pay quarterly dividends of 10 percent on the government's nearly 80 percent stake.
The suit names both Treasury and the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac.
Perry Capital, which began investing in both firms in 2010, claimed in the lawsuit that shareholder value was impaired when the government instituted a "dividend sweep."
The new arrangement prevents the firms from building capital that might have allowed them to redeem the government shares and eventually operate independently to the benefit of private shareholders.
"This lawsuit seeks to uphold the rule of law," Theodore Olson, a partner at the law firm Gibson, Dunn & Crutcher and a former U.S. solicitor general, said in a statement.