Earlier this month, D.C. District Court Judge Royce Lamberth threw out a lawsuit brought against the government by shareholders of Fannie Mae and Freddie Mac. Some critics of the housing giants have hailed Judge Lamberth’s finding against investors as a win for American taxpayers — but nothing could be further from the truth. The case has further shaken the confidence of investors who aren’t sure what to expect next from a government that has often acted unilaterally and unpredictably in dealing with the recent financial crisis.

In a stunningly misguided opinion, Judge Lambert dismissed the two core claims that had been brought by plaintiffs: first, that the Federal Housing Finance Agency was illegally taking profits from Fannie and Freddie shareholders; and second, that the siphoning of these profits was a violation of FHFA’s duty as conservator.

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