The Obama administration may be close to calling a truce with aggrieved shareholders of Fannie Mae and Freddie Mac.
Shares of the mortgage-financing giants jumped on Friday after an influential analyst said he believes the White House may be moving closer to settling multiple lawsuits stemming from the government bailout of Fannie and Freddie in 2008.
Several shareholders, including Fairholme Capital Management and Perry Capital, sued over the government’s 2012 decision to change the terms of the bailout and sweep most of Fannie and Freddie’s profits to the US Treasury rather than collecting a set dividend.
On Friday, Dick Bove, an analyst at Rafferty Capital Markets, suggested a settlement is near because government lawyers recently asked to see heavily redacted documents in the case between the US and preferred shareholders, led by mutual-fund giant Fairholme.
“The unusual request suggests that the White House may be moving closer to a negotiated settlement in the multiple Fannie Mae lawsuits which will benefit shareholders in this company, the largest of whom is the US taxpayer,” Bove wrote in an opinion piece on CNBC.com.
Fannie Mae stock gained 4.1 percent Friday to close at $2.28, while Freddie Mac rose 4.8 percent to close at $2.18.
The timing of the request by the White House has led many Fannie and Freddie watchers to wonder if the feds are worried that they might lose the case.
Government documents in the suit — which were finally turned over to shareholders on Aug. 11 — show officials overstated the shaky health of the two mortgage giants for years, raising questions about the necessity of the net worth sweep of 2012.