Fannie Mae and Freddie Mac Shareholders Lose in Court; Here's What That Means for the Stock
June 23 was a big day in the mortgage market as the Supreme Court decided two issues that will weigh heavily on the future of Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC). The Supreme Court ruled that the president has the authority to replace the director of the Federal Housing Finance Agency (FHFA), and it rejected a shareholder lawsuit by several hedge funds that claimed the FHFA exceeded its authority in handling the two government sponsored entities (GSE). This decision basically removed the last justification for owning the stocks.
Fannie Mae and Freddie Mac shareholders tried to argue that the structure of the Federal Housing Finance Agency was unconstitutional, and the government had no right to institute its net profit sweep, which diverted all of Fannie and Freddie's net income to the U.S. government.
Source Fool.com
