Bill Ackman’s Pershing Square Capital Management LP sued the U.S. government claiming revised terms of the 2008 bailout of Fannie Mae and Freddie Mac cheat investors of the profit from the mortgage-financing entities, Bloomberg News reported today. The Federal Housing Finance Agency “purportedly acting as conservator” of Fannie Mae and Freddie Mac, and the Treasury Department “agreed between themselves to strip all profits from the companies,” depriving shareholders “of any economic value in their shares,” according to the complaint filed yesterday in the U.S. Court of Federal Claims in Washington. Taxpayers rescued Fannie Mae and Freddie Mac with a bailout that swelled to $187.5 billion. While the firms have sent more than that amount back to the Treasury, funds were counted as a return on the U.S. investment rather than full repayment of the aid. The issue for investors is that the Treasury Department decided in 2012 to keep all the companies’ profits. Pershing Square’s complaint is at least the 20th lawsuit challenging the government’s decision to divert Fannie Mae and Freddie Mac profits to the Treasury.
