GSEs: Government’s Position in Delaware Case Upended by Ruling in 9th Circuit

By Investors Unite

A decision by the Ninth Circuit Court of Appeals yesterday has bolstered the case of Fannie and Freddie shareholders David Jacobs and Gary Hindes, who are arguing in court that the Net Worth Sweep violates Delaware state law.

The Ninth Circuit upheld a lower court’s decision in the case of United States of America ex rel. Adams v. Aurora Loan Serv., Inc. The Court agreed with the government that the conservatorship of the GSEs does not “transform Fannie Mae and Freddie Mac into federal instrumentalities.”  The ruling said the conservatorship “places FHFA in the shoes of Fannie Mae and Freddie Mac, and gives the FHFA their rights and duties, not the other way around.”

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