WASHINGTON The efforts of Fannie Mae and Freddie Mac shareholders to claw back the value of their investments by suing the U.S. Treasury have not elicited much support on Capitol Hill.
During a panel discussion on government-sponsored enterprise reform, Rep. John Delaney, D-Md., made it clear that he does see any merit in the shareholders' litigation.
"I do think the claims as relate to these interests are some of the most unsympathetic claims that I have heard in my life," Rep. Delaney said Thursday at a Bipartisan Policy Center event.
Delaney also is unsympathetic with the investors' efforts to secure a settlement with the Treasury Department.
"I don't really see a basis for cutting a deal with those preferred shareholders," he said.
Federal Housing Finance Agency and Treasury Department officials placed the two GSEs in conservatorship in 2008 following the housing crash.
In 2012, as the GSEs were starting to be profitable again, Treasury changed the terms of the conservatorship and began sweeping all of Fannie and Freddie's profits into the U.S. Treasury. The sweep of all their profits prompted the GSE shareholders to sue.
Rep. Randy Neugebauer, R-Texas, said it is up to the courts to determine the merits of the shareholders' case.
"What we do know is that if the federal government had not stepped in and propped up those two entities it would have had a catastrophic impact," Neugebauer said at the BPC event.
"We will have to see what the courts do," he said. "The bottom line is these entities should not be in conservatorship. They should have been rolled into receivership a long time ago and this issue would be resolved."
Delaney has sponsored legislation that would transfer Fannie and Freddie's securitization activities to Ginnie Mae, while the two GSEs would continue to manage and liquidate their mortgage portfolios.
Neugebauer did not express support for Delaney's legislation that was introduced year ago. The Texas congressman chairs the House Financial Services subcommittee on financial services and consumer credit.