What Happens if the Government Loses on the Third Amendment? The Senior Preferred Stock Certificates Spell Nothing But Trouble For the Government
- September 10, 2014
Forbes, By Richard Epstein
Right now litigation is going forward on multiple fronts in the multi-billion battle over who gets the billions of dollars in new cash flow and deferred tax assets now that Fannie Mae and Freddie Mac have both turned profitable. The government strategy is to draw matters out by resisting discovery and insisting that none of the private shareholders of Fannie and Freddie have standing to bring their claims.
For over eighteen months now, I have analyzed and commented on these law suits as a consultant for several of the institutional investors who have stakes in the outcome of the litigation. My current judgment is that the government is on the losing end of this long-running tug-of-war for two reasons.