The ‘Entire Fairness’ Solution To Fannie Mae Shareholder Rights

ValueWalk, By Michael Ide

With the Fairholme Funds Inc v FHFA well into discovery, many Fannie Mae / Federal National Mortgage Assctn Fnni Me OTCBB:FNMA and Freddie Mac / Federal Home Loan Mortgage Corp OTCBB:FMCC minority shareholders are starting to feel confident that evidence of self-dealing and the government conservator acting in bad faith will come out, but this raises the tough question of what remedy the courts might be willing to order. In their recent paper, After the Deal: Fannie, Freddie and the Financial Crisis Aftermath, UC Berkeley Law professor Steven Davidoff Solomon & University of Pennsylvania Wharton School associate professor David Zaring argue that an ‘entire fairness’ approach would give the government a way to remedy the third amendment, though shareholders won’t be happy with the amount that Solomon and Zaring think that they are due.

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