(Reuters) — The U.S. Supreme Court docket on Monday declined to once more hear a multibillion-dollar case pursued by shareholders of Fannie Mae and Freddie Mac arising from the federal authorities’s takeover of the mortgage finance companies in the course of the 2008 monetary disaster.
The justices turned away an attraction by the buyers of a decrease court docket’s ruling in opposition to their problem to a 2012 settlement that resulted in a whole bunch of billions of {dollars} being redirected from Fannie Mae and Freddie Mac to the U.S. Treasury. The shareholders had argued that this association unlawfully disadvantaged them of dividends with out compensation.
The non-public buyers pursuing the attraction on the Supreme Court docket embody Bruce Berkowitz’s Fairholme Funds and funds managed by New York-based Owl Creek Asset Administration.
Fannie and Freddie had been created by Congress and function as for-profit companies with non-public shareholders, with the mission of increasing the nationwide residence lending market by shopping for residence loans from non-public lenders and repackaging them as mortgage-backed securities.
When the housing market collapsed in 2008, the businesses suffered overwhelming losses. To keep away from catastrophic results for the U.S. financial system, they had been positioned in conservatorship below the newly created Federal Housing Finance Company.
The case earlier than the Supreme Court docket arose from myriad lawsuits that personal shareholders filed over the 2012 settlement between the U.S. Treasury and the FHFA geared toward repaying the federal government for the bailout.