Investors Burned on Money Grab by the Treasury Department

Discussion in 'News / Current Events' started by InTheLight, Oct 1, 2014.

  1. InTheLight

    InTheLight
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    The scenario: A hedge fund company and a mutual fund company started buying up severely depressed shares of Fannie Mae and Freddie Mac in the aftermath of the 2008 financial crisis in the hopes that they would return to profitability and provide capital appreciation. Indeed, shares went from around $.25 in Oct 2009 to $4.50 in July 2014.

    In 2008 the government took over "Frannie" to keep them solvent with the stipulation that Frannie pay the Treasury Department a 10% dividend on the stock issued to the government in exchange for the bailout.

    But then in 2012, the Treasury Department changed the deal requiring the 2 home mortgage giants pay them all the profits generated by them. This prompted a lawsuit by the two investment firms claiming that the change in terms was unconstitutional since the government was illegally seizing private property. A ruling was handed down yesterday which basically destroyed their argument. In fact, Judge Royce C. Lamberth didn't even allow the plaintiffs to make oral arguments in the case.

    Full story here:
    http://online.wsj.com/articles/fran...2753519717962134038504580188563460446100.html
     
    #1 InTheLight, Oct 1, 2014
    Last edited by a moderator: Oct 1, 2014
  2. Revmitchell

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    Have to be a suscribed member to read the story.
     
  3. InTheLight

    InTheLight
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