Sweeney Delivers Another Victory for Fannie Mae, Freddie Mac Investors by Todd Sullivan, ValuePlays
Now, kudos for the WSJ for at least giving this decision some generic lip service coverage (as opposed to previously ignoring of them) but one has to notice it void of the colorful adjectives used to describe any “crushing” or “catastrophic” defeat shareholders see. Further, one must also notice when plaintiffs lose a courtroom battle their stances are described by the WSJ as “far-fetched” , “flawed” , “junk economics and dubious legal reasoning” but here, just a simple “set-back” for the government. But, why quibble, babysteps, at least they covered this victory.
From the WSJ:
The government suffered a set-back Wednesday in its attempts to fend off lawsuits brought by a group of Wall Street investors over the treatment of Fannie Mae and Freddie Mac .
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A judge in the U.S. Court of Federal Claims denied the government’s motion to stay proceedings in that court, according to two people familiar with the decision. Lawyers for the government had asked the Court of Claims to put the lawsuits on hold pending the appeal of a decision by a judge in the U.S. District Court for the District of Columbia that dismissed a similar group of cases last September. Shares of Fannie Mae jumped by more than 8% Wednesday morning. Shares of Freddie Mac rose by more than 4%.
Wednesday’s decision means the plaintiffs, who include Fairholme Funds, will be able to continue to collect information from the government in hopes of bolstering their argument that the Court of Claims has jurisdiction over the cases.
The cases were brought by investors claiming to be wronged by the government’s sweep of nearly all of the profits of Fannie Mae and Freddie Mac. The plaintiffs argue that the profit sweep is an illegal “taking” under the U.S. Constitution. The Court of Claims hears cases against government.
Sweeney has said on more than one occasion plaintiffs will have their day in court and in regards to HERA and FHFA:
I know you’re going to say that the Court has no ability to have any — to, in any way, impact FHFA, and I disagree with that. I don’t believe that is a blanket insulation.
The government continues to suffer defeat after defeat in its efforts to deny plaintiffs their day in court before Sweeney. Predictably, they have lost and she has denied them at every turn. Her next order ought to be approving Alvarez and Marsal (hired by Fairholme) to the list of those able to see documents covered by the protective order.