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Noah Feldman

Hedge Funds Get a Crack at Weakening the Administrative State

The Fifth Circuit takes some power away from the agency that oversees Fannie Mae and Freddie Mac.

The hedge funds versus the bureaucrats

The hedge funds versus the bureaucrats

Photographer: Bloomberg/Bloomberg

It’s not often that hedge funds and the Constitution come up in the same sentence — let alone the same judicial opinion. But the two are very much in play in an important opinion issued by the U.S. Court of Appeals for the Fifth Circuit.

In it, the court handed a win to hedge funds that are challenging the 2012 decision by the Federal Housing Finance Agency to make Fannie Mae and Freddie Mac transfer their profits to the U.S. Treasury in perpetuity — a transformation of those previously quasi-private entities known as the net worth sweep.