Shorter Court Filing: Socialize Our Losses, and Privatize Our Gains

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Various players in companies rescued by the US Treasury have taken to filing lawsuits in an attempt to get a share of the profits after the bailouts:

Fannie Mae and Freddie Mac (FMCC) plunged in New York trading after investors including Bruce Berkowitz’s Fairholme Capital Management LLC lost a legal bid yesterday to force the bailed-out companies to share profits with private shareholders.

Fannie Mae fell 29 percent to $1.92 at 11:10 a.m. Freddie Mac dropped 26 percent. Their preferred shares, which drew investments from private-equity and hedge funds, also tumbled, with one series plummeting 54 percent. The mortgage giants had surged for more than two years on speculation that shareholder rights to the earnings could be restored.

The investors sued for breach of contract over allegedly promised dividends and liquidation preferences, and what they called an illegal “taking” under the U.S. Constitution. U.S. District Judge Royce Lamberth rejected their claims, finding that the government is allowed under a 2012 amendment to the companies’ bailout agreements to sweep “nearly all” profits from Fannie Mae and Freddie Mac to the U.S. Treasury.

Here is the crux of what they were looking for:

Fannie Mae and Freddie Mac each surged more than 1,000 percent in 2013 on speculation that courts or lawmakers would allow private investors to share in the companies’ profits, which have rebounded along with the housing recovery. The mortgage-finance firms extended their rally through July, then lost their gains for the year in September, when they each fell more than 30 percent.

There you have it.

The vultures figured that they could buy worthless shares, and convince the Congress of the courts to give them free money at the taxpayer’s expense.

Lamberth just told them to go pound sand.

BTW, it ain’t just these parasites trying to do this.

Like a bad penny, Maurice “Hank” Greenberg is back:

The government today entered its third day of trial defending its $182 billion rescue of American International Group Inc. in another Washington federal court. Maurice “Hank” Greenberg’s Starr International Co., the insurer’s biggest shareholder when the financial crisis struck, claims the assumption of 80 percent of AIG stock by the U.S. in September 2008 in exchange for an $85 billion loan amounted to an unconstitutional taking of private property.

The timeline here is pretty clear:

  • Hank Greenberg runs AIG.
  • Hank Greenberg is kicked out of AIG for dodgy accounting.
  • AIG implodes, in large part as a result of the sh%$ Greenberg did.
  • AIG is bailed out. (More accurately, the counter-parties are bailed out, but that’s another story)
  • Greenberg files a lawsuit to get money for the company that he had a hand in destroying.

Seriously.  This sort of sh%$ is why Eric “Place” Holder will be remembered by history for his refusal to prosecute the banksters.

This will happen, because the people who wrecked the world still don’t feel that they have done anything wrong.

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