Amid newly energized trading in the stocks of mortgage giants Fannie Mae and Freddie Mac, shareholders filed suit Monday against the federal government, contesting its takeover of the two in 2008.
The City of Austin Police Retirement System in Texas and Seattle-based bank Washington Federal are seeking $41 billion in damages. They charge that the conservatorship of Fannie Mae and Freddie Mac was "unlawful and unwarranted," as is the requirement instituted this year that the two pay the Treasury all of their profits.
"The government has appropriated many billions of dollars' worth of private shareholder property, without providing any compensation for this action," according to the filing.
Fannie Mae reported record profits in the second quarter of this year and has now paid the Treasury $95 billion in dividends, nearing the $116 billion it originally drew. Shareholders believe they should be reaping some of these profits, not the federal government.