Kelly v. United States: Federal Circuit Oral Argument Recording Now Available (Case 24-2042)

The recording of yesterday's oral argument in Kelly v. United States (Case No. 24-2042) before the U.S. Court of Appeals for the Federal Circuit is now available — at no charge.

Listen to the full oral argument here (MP3)

The panel: Judge Timothy B. Dyk, Judge Jimmie V. Reyna, and Judge Richard G. Taranto — three of the Federal Circuit's most experienced jurists.

Why This Matters

This case is part of the sprawling litigation over what happened to Fannie Mae and Freddie Mac shareholders after the 2012 Net Worth Sweep — the Third Amendment to the Senior Preferred Stock Purchase Agreements that converted a fixed 10% dividend into a full sweep of both companies' entire net worth to the U.S. Treasury every quarter.

The numbers are staggering:

• $191 billion — the total capital injected by Treasury into the GSEs during the financial crisis
• $301 billion — the total swept back to Treasury before the sweep ended in 2019
• $110 billion — the difference. That's not a bailout repayment. That's a profit extraction.

Shareholders have argued, across multiple courts and multiple theories, that this constituted an unconstitutional taking of their property without just compensation — a violation of the Fifth Amendment. The Court of Federal Claims has jurisdiction under the Tucker Act over these monetary claims against the United States, and the Federal Circuit hears the appeals.

The Broader Litigation Landscape

Kelly v. United States is one of several shareholder cases working their way through the Federal Circuit:

• Fairholme Funds, Inc. v. United States (20-1912, 20-1914) — The Federal Circuit issued a split decision in February 2022, affirming in part and reversing in part, allowing certain direct shareholder claims to proceed.
• The $612 million jury verdict — In a related case at the Court of Federal Claims, shareholders were awarded $612.4 million after a rare jury trial, finding that the government's actions damaged shareholder value.
• Case 24-1167 — Another Federal Circuit opinion issued August 2025 addressed derivative claims by shareholders seeking to recover billions on behalf of the companies.

The legal battlefield spans the Court of Federal Claims, the Federal Circuit, multiple district courts, and the Supreme Court (which addressed FHFA's authority in Collins v. Yellen in 2021).

What to Listen For

When you listen to the oral argument, pay attention to:

1. Jurisdictional questions — Does the Court of Federal Claims have Tucker Act jurisdiction over the specific claims raised in Kelly? The government has repeatedly tried to shut the door on shareholder claims by arguing jurisdictional barriers.

2. The takings theory — Did the Net Worth Sweep constitute a taking of shareholders' property interests? The Fifth Amendment says the government cannot take private property for public use without just compensation. Shareholders argue their dividend rights and equity value were confiscated.

3. The illegal exaction theory — Was the Net Worth Sweep authorized by statute, or did it exceed the government's authority? If it exceeded statutory authority, any money taken was an illegal exaction that must be returned.

4. The Judges' questions — Judge Dyk is known for sharp, probing questions. Judge Taranto brings deep analytical rigor. Judge Reyna rounds out a panel that has seen these GSE issues before. Their questions during oral argument often signal how they're leaning.

The Big Picture

Seventeen years after the conservatorship began in September 2008, the fight over what happened to Fannie Mae and Freddie Mac shareholders is still being litigated. The government took control of two companies that back roughly $7 trillion in American mortgages, injected $191 billion in taxpayer money during a crisis, and then — once the companies returned to profitability — swept every dollar of profit for seven straight years.

Whether that was prudent conservatorship or an unconstitutional taking is the question that will not die. Kelly v. United States is the latest chapter.

Listen to the full oral argument (MP3)

Oral argument recording credit: Peter A. Chapman. Posted by the U.S. Court of Appeals for the Federal Circuit.

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For more on Fannie Mae, Freddie Mac, and the ongoing shareholder litigation, visit Fanniegate: The Definitive Guide or follow @DoNotLose on X.