Instead of winning billions for shareholders, the plaintiffs handed Joe Biden tighter control over the mortgage industry.
Justice Samuel Alioto
By Mark Josep Stern | Slate
In 2016, a group of wealthy investors hatched a lawsuit to dislodge $124 billion from the United States treasury and transfer a chunk of the money to their own pockets. The investors attacked the Federal Housing Finance Agency, a powerful executive agency that regulates Fannie Mae and Freddie Mac. Their plan was to force a settlement that would enrich shareholders by transferring billions of dollars back to the mortgage giants and release them from government control.
It is difficult to overstate how badly this scheme backfired. On Wednesday, the Supreme Court affirmed the investors’ constitutional theory—then rejected their effort to claw back billions while deregulating the mortgage industry. In the process, they allowed President Joe Biden to appoint a new head of the FHFA, a progressive who will keep Fannie Mae and Freddie Mac funneling money to the government (instead of shareholders) indefinitely. The plaintiffs, in other words, did not just lose this case. They inadvertently defeated their ultimate objective, entrenching the very system they tried to topple.
