WASHINGTON—An attorney for the Federal Housing Finance Agency told the U.S. Court of Appeals for the D.C. Circuit this week that FHFA had broad authority to act in its own interests as conservator for Fannie Mae and Freddie Mac after the 2008 housing crash, and did not have to put the companies’ private shareholders first, according to Law360’s report on the hearing.
The argument came in the long-running Fairholme litigation over the 2012 “net worth sweep,” which redirected the mortgage giants’ profits to Treasury.
The appeal follows a lower-court ruling that let stand a jury verdict awarding shareholders $612.4 million in damages after finding FHFA had breached the implied covenant of good faith and fair dealing. A D.C. federal judge upheld that verdict in March 2025, rejecting FHFA’s argument that the Supreme Court’s 2021 Collins v. Yellen decision foreclosed the shareholders’ claim.
FHFA’s position on appeal is that Collins undercuts that verdict and reinforces how much latitude Congress gave the agency under the Housing and Economic Recovery Act when it placed Fannie and Freddie into conservatorship. FHFA itself says the companies were put into conservatorship in September 2008 “to preserve and conserve their assets and property and restore them to a sound and solvent condition,” and that as conservator it holds the powers of management, boards and shareholders, Law360 said.
The D.C. Circuit hearing in Fairholme Funds, Inc. v. FHFA was held April 21 before Judges Justin Walker, J. Michelle Childs and Douglas Ginsburg, according to the court’s oral-argument calendar. The case remains one of the highest-profile remaining shareholder challenges tied to the government’s takeover of the two housing-finance giants during the financial crisis.