In a courtroom rife with anticipation, the U.S. Federal Housing Finance Agency (FHFA) was found to have overstepped its boundaries. With all eyes on the jury, they ruled that the 2012 amendments to stock purchase agreements involving Fannie Mae and Freddie Mac were inappropriate.
The result? A sweeping decision that mandated a whopping $612.4 million payout to shareholders.
Fannie Mae and Freddie Mac: The Turbulent Background
Dating back to the tumultuous 2008 financial crisis, the FHFA had assumed control of both Fannie Mae and Freddie Mac.
This was meant as a temporary safety net, much like a firefighter dousing flames in a burning building, ensuring the stability of these significant mortgage financiers.
Yet, in 2012, what was supposed to be a safety mechanism shifted gears.
The U.S. Department of the Treasury’s yearly dividend soared from a mere 10% of its investment in the two entities to an astonishing 100% of their net profits.
To many, this seemed as if the firefighter, after putting out the blaze, decided to claim the property as his own.
