FHFA, Fannie and Freddie delivered their motions to dismiss the amended complaints filed by the Class Plaintiffs, Fairholme and Arrowood to Judge Lamberth this evening, and a copy of the filing is attached to this e-mail message. FHFA and the GSEs tell Judge Lamberth they haven’t breached their contracts with shareholders because the GSEs haven’t been liquidated; in the event of a future liquidation, any value remaining after satisfaction of superior claims will flow to junior preferred shareholders and then to common shareholders. Additionally, FHFA argues, shareholders shouldn’t have expected to receive anything when they purchased their shares. The Third Amendment, FHFA tells Judge Lamberth, is within the range of reason of what GSE shareholders should have expected, especially after HERA modified the contracts between the GSEs and their shareholders. FHFA adds that Judge Lamberth can ignore Delaware and Virginia law because federal law controls.13-mc-01288-0066
