'Stupidest Lawsuit Ever': Freddie Mac Sues Feds, Taxpayers Pay Either Way and Law Firm Profits
In what a Bloomberg columnist is calling the “stupidest lawsuit ever,” government-funded Freddie Mac, which has been shored up by taxpayer bailout money, is suing the feds.
So, regardless of how the dispute between the congressionally chartered housing financier and the Internal Revenue Service over an alleged unpaid tax debt is resolved, taxpayers can expect to have to pay a significant price for the litigation, since the government, in effect, is suing itself, writes Jonathan Weil.
But the litigation should be a moneymaker for Shearman & Sterling, which is representing Freddie Mac, according to Weil.
Freddie Mac’s conservator, the Federal Housing Finance Agency, agreed that it could file the Tax Court case against the IRS last month, but declined to comment when asked by Bloomberg why officials there thought this was a good idea. Representatives of the IRS and Shearman & Sterling also had nothing to say.
However, a spokeswoman for Freddie Mac told Weil that the lawsuit is based on principle:
Believing that it doesn’t owe the tax and penalties that the IRS is seeking, Freddie Mac, she says, “has an obligation to run the company according to the laws of the land. And in an instance where we believe we’re in the right, we believe we have an obligation to assert that.”
