March 3 (Reuters) - Fairholme Capital Management has sent letters to the boards of U.S. government-controlled Fannie Mae and Freddie Mac seeking corporate governance actions including a halt to borrowing to pay dividends to the government.
Fairholme, founded by fund manager Bruce Berkowitz, also wants the mortgage companies to hold annual shareholder meetings and relist on the New York Stock Exchange.
Fannie and smaller sibling Freddie have operated under federal conservatorship since 2008, when the government bailed out the two companies at the height of the financial crisis.
Since then, the two companies, which own or guarantee 60 percent of all U.S. home loans, have posted record profits, helped by a housing recovery that has lifted prices and kept a lid on defaults.
Investors, including Fairholme and Perry Capital LLC, have sued the U.S. government, seeking a reduction in federal stake as Fannie and Freddie are returning profits to taxpayers.
"Any notion that the answer to Fannie and Freddie's pre-crisis problems is more government involvement is just as flawed as the idea that the United States economy can properly function without their core businesses," Berkowitz said in Fairholme's letter to the boards.
Fairholme had a 2.24 percent stake in Fannie and a 2.98 percent stake in Freddie as of Dec. 31, according to Thomson Reuters data.