The legal tug-of-war over the more than $130 billion that mortgage giants Fannie Mae and Freddie Mac made last year, all of which was handed over to the Treasury Department, is looking grim for the government.
In 2012, the Treasury tweaked the terms of the bailout agreement it had with Fannie and Freddie when it seized the two companies on the verge of collapse, which increased the amount they paid out to seven times what they would have paid under the previous agreement, according to the Wall Street Journal.
Investors are betting that plaintiffs in the lawsuit who claim the money belongs to the companies will win the case. About 20 suits have been filed, but even a win might not mean a settlement for awhile.
“If investors are going to get any money out of this, it’s going to come out of the courts, and it’s going to take years,” David Felt, a lawyer who headed litigation with the Federal Housing Finance Agency, told the Journal. [WSJ] – Angela Hunt