The U.S. Supreme Court has struck a blow at shareholders Fannie and Freddie

Fannie Mae and Freddie Mac tried to sue the U.S. government for more than five years in hedge funds that have been trying to add value to investments in nationalized mortgage giants on Wednesday.

Shares Fannie and Freddie immersed in more than a third of the resolution, it threw out a number of investor claims that the U.S. Treasury had illegally earned two billion dollars from both companies.

Fannie and Freddie, who guarantee a large portion of U.S. mortgages, have been under government conservation since they were rescued in an accident in the housing market in 2008.

Fannie and Freddie’s preferred shares hit the resolution even harder, with the most traded falling more than 60 percent.

The Supreme Court judge accused the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, of exceeding its authority under federal law by making “profit gains” in 2012 to recover taxpayer dollars used to rescue the two companies in 2012. .

The judges ruled that the shareholders could say that the structure of the FHFA was unconstitutional because the agency director was not properly accountable to the president.

The constitutional claim was sent back to the lower court to decide what remedies the shareholders should receive.

The director of the FHFA, appointed by the president and confirmed by the Senate, usually serves a five-year term. He may be removed from office only for “reason”.

Hedge fund managers such as Bill Ackman and John Paulson have opted for Fannie and Freddie shares and preferred shares if the company is privatized, especially to return some of the profits made by the Treasury during the conservatory.

In his latest annual report on the hedge fund, in Pershing Square, Ackman wrote that the Supreme Court’s positive ruling would be a “game changer” for his investment.

But he added: “Whatever decision the court makes, we believe it is our investment [Fannie and Freddie] it’s always a valuable opportunity to get out of the Conservatives because of the irreplaceable role they play in the U.S. housing financing system. “

Additional report by Eric Platt