NEW YORK (TheStreet) --Storied consumer advocate and occasional third party presidential candidate Ralph Nader owns shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) , and has criticized the government for ignoring the rights of shareholders since putting the government sponsored enterprises into conservatorship in 2008. Along with deep-pocketed investors such as Perry Capital and Fairholme Funds, Nader has been arguing the government needs to recognize the rights of shareholders, instead of sending all the profits of the GSEs to the Treasury, aside from minimal capital buffers.

Nader spoke to TheStreet senior writer Dan Freed this week to elaborate on his position.

TheStreet: Shareholders of Fannie Mae and Freddie Mac have filed about 20 different lawsuits against the government. Have you?

Ralph Nader: No. We haven't. We've been on this GSE on different matters for over 25 years. The first interest was were they fulfilling their mission of advancing affordable housing for lower income people, which is one of the reasons why they were given a privileged position and their charter. And so we had maps of cities all over the country, redlining maps, and we concluded that they weren't doing what they were supposed to be doing or even what they were bragging about doing. That was the first.

The second entry subject was a little later when they messed around with the accounting to increase the stock options and compensation of their top executives, and their heavy-handed lobbying at Capital Hill.

And then the third was the whole 2008-2009 conservatorship.

TheStreet: So why haven't you joined all these other plaintiffs in this latest issue, you know, ignoring the shareholders in the wake of the conservatorship, or abusing them if you want to put it that way. I don't think that's too strong way to put it. Why aren't you suing them?

Nader: Well, first of all, others are and they found lawyers, or they could pay for lawyers. So we decided, you know, why duplicate it? There are plenty of lawsuits now, and [Gibson Dunn partner and former U.S. Solicitor General] Ted Olson's got a lot of credibility in the Supreme Court whereas we couldn't get any lawyers to take the case pro bono, you know, and we usually have to have pro bono lawyers.

TheStreet: I see. Olson has been much more out in front on this than [David] Boies [another high profile attorney representing GSE shareholders in a suit against the government] has. Any sense of why that is? They're both suing but it seems like Olson's been more vocal and you hosted a recent shareholder event with Olson rather than Boies. Why is that?

Nader: I think part of it is Boies is in New York, Olson's in Washington. And Olson has the stronger case. Of all the cases filed, he has the stronger case. You know, that the Treasury revised its position in 2012 [by changing the terms of its investment in the GSEs so that instead of the GSEs owing a 10% dividend to the Treasury, the GSEs suddenly owed the Treasury all of their profits for an indefinite period, aside from minimal capital buffers.]

TheStreet: What do you think is going on here? Why do you think the Treasury did this amendment in 2012?

Nader: I think two reasons. One, they thought they could get away with it because they thought there's no history of law behind conservatorship like this. It's all behind bankruptcy. And so they thought they could write their own rules, just like they wrote their own conservatorship. And the second is, they sensed that this would help keep the deficit down -- that this huge Niagara of profits would --and they were right on that.

Oh by the way, there's a third reason. And they had already stripped the shareholders of any rights, you see, so they didn't have to worry about the shareholders. But they miscalculated that one, at least to the point where they're confronting lawsuits which they think they're going to win.

TheStreet: I feel like this is the kind of a thing where if ordinary Americans, more Americans were aware of what the government had done, that it could be a huge scandal for Obama. But I think people just aren't aware of it. I mean, it seems really brazen what his administration has done.

Nader: Well, it started with Bush, obviously, and it was the Bush administration that misled the Fannie and Freddie shareholders in 2008, starting with OFHEO's director [James Lockhart], and then followed by [Henry] Paulson, Secretary of Treasury, and then [Ben] Bernanke, Chairman of the Federal Reserve. And they all said the same thing, "Don't worry folks, these companies are well capitalized. There's nothing to worry about." And less than two months later they went over the brink. So the deception, which raises real equity remedies for shareholders. I mean, if corporate executives did that, even the slumbering SEC would have woken up and gone after them.

That was all done under Bush. The switcheroo, changing the rules and getting all the profits, that was done under Obama. But the problem is that by 2012 most of the big institutional shareholders had bailed out, so there wasn't a vested interest until about a year ago when the hedge funds started moving in. Now there's a vested interest of some magnitude.

TheStreet: Right. Talking about your criticism of the GSEs before the 2008 crisis, you recently wrote, "I was clear that their drive for profits could tempt them into murky legal waters. My opposition to their management compensation packages and questionable accounting practices were made plain." Why then, I wonder, did you buy shares in the GSEs?

Nader: Well, I bought them way before the crash.

TheStreet: Right. No. I know that. You were raising questions about the compensation packages and accounting practices before the crash, too.

Nader: Sure. But that's what shareholders should do. Instead of quitting, they should push. And you know, some people don't remember that Fannie and Freddie were promoted as the second safest investment in America, you know, after Treasuries. So there are a lot of people...

TheStreet: Yeah. So that's why you were an investor.

Nader: Yeah. So a lot of people put it away for their kids' education, you know, they put it in a lock box. And then, you know, they were severely deceived in 2008 and then wow, just in a matter of days, you know, it fell down, you know, from 30, 20, 10, five, four, three. You know, most individual shareholders don't react that fast even if they watch it in the papers. They can't believe it. And those are the people who were mistreated. We're not talking about day traders today.

TheStreet: Do you have any misgivings about the strong position that you've taken on the GSEs for this reason. I mean, your position is the right one, but do you ever feel like that, you know, geeze, I'm simply acting as the kind of acceptable poster boy or the front man for a bunch of hedge funds that are just going to get totally rich off this trade?

Nader: Well, we want tougher, we wanted tougher regulation prohibiting them from the kind of lobbying they're doing, this is all before 2008, making them meet the demands for affordable housing, the needs of affordable housing which they were ignoring because they were going for the easiest profits. And so, you know, it's like saying that someone who's been around for years, "These newcomers, aren't they tainting you?" No. I mean, you know, we're really well grounded in this. And they're raising interesting issues on the decision to grab all the profits. And if they're doing it and they've got lawyers to do it, well, that sort of helps us because we also agree that, that was an unlawful interpretation, changing the rules of the game unilaterally like that.

Just like they delisted. I mean, Demarco delisted from the New York Stock Exchange Freddie and Fannie when there was no reason to do it, and billions of dollars evaporated in a week. You know, you push them onto the pink sheets and the thing dropped, and when I tried to write them and demand an explanation, all he really could come up with was, "Well, it saves on legal fees. So like we better do it now, we'll get rid of it, won't have to pay legal fees." But I said, "But you're statutorily required to preserve the assets. How do you preserve the assets when you delist them before the New York Stock Exchange even indicated any warning?" Well, that's what they said.

So, you know, they're operating just like autocrats, total autocrats. But they were using the shareholders because they needed them to have 20 percent so that the government didn't have to put five trillion dollars of liabilities on their own books. So they were using the shareholders and abusing them at the same time. You know about that, don't you? The 80/20?

TheStreet: Yes. I do. [Nader is referring to the fact that when the government put the GSEs into conservatorship, it took a 79.9% stake, which is the maximum it could take without adding the debt to the federal budget. In this way, Nader, argues, shareholders were being used, because their minority stake prevented the official tally from increasing on the federal deficit .]

Nader: So, you know, there are real equitable issues here that are raised.

TheStreet: Aside from restoring the rights of shareholders, what would you like to see happen to Fannie and Freddie?

Nader: Well, I like a public utility model. You know, just turn them into regulated public utilities, limited rates of return, strong regulation. They could still have shareholders and all that, but I think that the alternative is real speculative chaos when you throw it open to all these sharks that would enter the field. And I'm not saying the realtors are terrified of Fannie and Freddie being dumped. That's why I don't think the Warner-Corker bill has a chance.

TheStreet: Say more. Why are the realtors terrified?

Nader: Well, because they see that the two, Fannie and Freddie, are the stable bedrocks of the housing mortgage market, and what's not to like, you know, from their point of view? So they're not moving into Congress because they know that Warner-Corker is going nowhere. And if it is starting to go, then you're going to see one hell of a powerful lobby. The real estate lobby, every district, you know, campaign contributions. They'd move in quickly and put an end to it.

TheStreet: Yeah. What do you think it will take for the Obama administration to say uncle in this battle with Ted Olson and others?

Nader: I think they'll just run out the clock to 2016, just like they're not really doing anything about restructuring. Well, because, you know, everything is going smoothly, you know, as far as the industry of housing, and they know they'll create a hornet's nest and have to expend capital, and why should they do that? You know, you know how politicians operate.

TheStreet: Yeah. But that internal memo that came out recently. You know, the memo to Tim Geithner where it says, you know, refers to their plan to be sure that shareholders get none of the profits, or whatever it said. I mean, if stuff like that keeps coming out, don't you think that can get pretty damaging?

Nader: No, because they'll come back and say, "Look, we wiped out GM (GM) - Get Report and Chrysler," and we say, "Well, you didn't wipe out Citigroup (C) - Get Report and AIG (AIG) - Get Report," and they said, "That's true but we haven't wiped out the shareholders yet and they're lucky to even be shareholders as we saved Fannie and Freddie." I mean, that's the short term political answer to all of that, that it could have been worse, you know? We could have done nothing. Well, nobody believes that because if they did nothing then it would have really been bad for everybody.

TheStreet: So you think the Obama administration will run out the clock, and then how does this ultimately get resolved? Through the courts eventually over time?

Nader: Yeah. I don't see it hitting the Supreme Court before two years, if that. I mean, you know, nobody can predict with great certainty anything, but you know, you ask, what's in it for them to make any changes? If they were real equitable, they would say "Okay, for the day traders we're not giving dividends but we're going to declare a special dividend since the tax payers have been paid back before the end of the year. We're going to declare a special dividend for shareholders who held shares before the collapse and still hold them." So for the old shareholders, they get a dividend, and the new ones, you know, they knew what they were getting into. They weren't deceived. It had already collapsed.

--Written by Dan Freed in New York

Follow @dan_freed

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