“The structure of the FHFA is contrary to the separation of powers and we are putting in place other procedures to determine the remedies, if any, that shareholders can obtain because of their constitutional right,” Judge Samuel Alito wrote for a majority of the court. Shareholders of both companies had argued that the FHFA`s structure was unconstitutional and that judges should overturn a 2012 agreement that the companies allegedly paid billions to the government. This money is compensation for the rescue of taxpayers received by Fannie Mae and Freddie Mac after the 2008 financial crisis. Investors should check the relevant offering circular and any additions thereto before making a decision regarding the purchase or sale of securities. In addition, before purchasing a security, consult your legal and financial advisors for information and analysis about the security, its risks and its ability to invest in your particular circumstances. Additional or other terms than those set forth in these Terms and Conditions may apply to information you receive or transactions made through a Freddie Mac website. These additional or deviating terms (i) will be disclosed to you, either by posting on the Freddie Mac website or by inclusion in a separate agreement, (ii) supplement these Terms and Conditions, (iii) supersede, if expressly stated, certain parts of these terms and conditions and (iv) bind you by reason of your use of the corresponding Freddie Mac website. WASHINGTON (F. F. ) ( ADDED) – The Supreme Court ruled Wednesday that the structure of the agency that oversees mortgage giants Fannie Mae and Freddie Mac is contrary to the principles of separation of powers in the Constitution.
Fannie Mae was funded by Congress until 1968, when the government needed the growing amount of money she had diverted to Fannie Mae to fund the Vietnam War. On that date, the government allowed Fannie Mae to become a publicly traded company and start selling shares on the stock exchange. The SEC also indicted three former Executives of Freddie Mac — former Chairman and Chief Executive Officer Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook and former Executive Vice President for the single Family Guarantee Donald J. Bisenius — in a separate lawsuit filed in the same court. Freddie Mac, officially known as the Federal Home Loan Mortgage Corporation, was founded in 1970, when Congress created it under the Emergency Home Finance Act. The concept was similar to Fannie Mae`s, as she also bought mortgages from lenders to allow lenders to lend more.
The judges referred the case of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac and was created during the 2008 financial crisis, to a lower court for other proceedings. While Fannie Mae and Freddie Mac are different units, they were both created by Congress to stabilize the U.S. housing market, while suffering the economic effects of the Great Depression.
