This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bernanke AIG Testimony Should Cheer Fannie, Freddie Plaintiffs

NEW YORK (TheStreet) -- The fact that Federal Reserve Chairman Ben Bernanke will be required to testify in a lawsuit brought by former AIG (AIG) boss Hank Greenberg against the U.S. government is good news for investors in Fannie Mae (FNMA)and Freddie Mac (FMCC) who are fighting a similarly improbable battle over key government decisions affecting billions of dollars of investments.

Greenberg, one of AIG's largest shareholders when the government bailed out the giant insurer in Sept. 2008, argues the government overstepped its authority and trampled on the rights of investors by taking a large stake in the company on what he claims were unfairly onerous terms.

While many observers dismiss his lawsuit as quixotic, it was given more legitimacy Monday when a Federal Claims Court judge William Wheeler ruled Bernanke must testify in the case.

"The Court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision-maker," Wheeler wrote in rendering his decision Monday.

Fannie and Freddie shareholders have also filed at least four lawsuits in recent weeks, challenging, among other things, the government's decision in August 2012 to sweep all the profits of the Government-sponsored enterprises into the Treasury. Boies, Schiller & Flexner is representing Greenberg in his case against AIG as well as some of the AIG shareholders.

The fact that David Boies, possibly the most prominent Democratic litigator in the U.S., not to mention Ted Olson of Gibson Dunne & Crutcher, arguably the most prominent Republican litigator, are both representing GSE shareholders in different lawsuits against the government, may be all the evidence anyone needs to see that these lawsuits are unlikely to be easily dismissed. But the requirement of Bernanke to testify, in what is arguably a more difficult case since Greenberg is largely on his own in bringing the lawsuit, nonetheless makes it appear even more likely GSE shareholders will get a serious hearing.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,880.36 -31.75 -0.19%
S&P 500 1,970.07 +0.12 0.01%
NASDAQ 4,462.9020 +20.2040 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs