October 1, 2014 / 12:53 AM / 3 years ago

U.S. lawsuits related to Fannie Mae, Freddie Mac profits dismissed

(Reuters) - A U.S. federal judge on Tuesday dismissed claims seeking to stop the U.S. government from making Fannie Mae and Freddie Mac pay a quarterly dividend to the U.S. Treasury.

A stands outside Fannie Mae headquarters in Washington February 21, 2014. REUTERS/Kevin Lamarque

The dividend equals the entire net worth of each entity, minus a small reserve that shrinks to zero over time.

The lawsuits were filed by investors Perry Capital LLC, Fairholme Funds Inc and Arrowood Indemnity Company.

The judge stated that Congress had given the Federal Housing Finance Agency and the Treasury Department the power to take the companies’ profits as a provision of the Housing and Economic Recovery Act.

The judge also said that the Housing and Economic Recovery Act’s “unambiguous” statutory provisions, coupled with the “unequivocal language” of the plaintiffs’ original GSE stock certificates compels the dismissal of all of the plaintiffs’ claims.

Reporting by Sudarshan Varadhan; Editing by Lisa Shumaker

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