By Nick Timiraos | The Wall Street Journal
Legal wrangling over who should keep the hundreds of billions of dollars in profits generated by Fannie Mae FNMA -0.66% and Freddie Mac FMCC -1.69% is heating up, and investors increasingly are betting the government will end up the loser.
Since last summer, the Treasury Department has faced a host of shareholder lawsuits over changes it made in 2012 to the terms of the bailout agreements with the mortgage-finance giants in 2008, when the government seized the firms as they neared collapse. The plaintiffs say that the Treasury wasn’t authorized to make the changes—which required Fannie and Freddie to send all of their profits to the Treasury—and that the move amounted to unlawful seizure of private property.
