Perry Capital LLC has demanded the U.S. Treasury department to stop its seizure of profits from Fannie Mae and Freddie Mac. They claim that the Treasury's actions are not only illegal but have also now destroyed its shareholders' confidence.

Perry Capital might be in for a long fight. Lawmakers, with the backing of the U.S. president, Barrack Obama, have called for Fannie Mae and Freddie Mac to be liquidated. The U.S. Treasury expects to profit US$200 billion from both institutions over the next 10 years. A statement released by Perry Capital said, "This blatant overreach by the federal government to seize all of the companies' profits at the expense of the companies and all of their private investors is unlawful and must be stopped."

Fannie Mae and Freddie Mac have been paying fixed dividends of 10% on the government's stake until the government agency revised its bailout terms with the companies. The U.S. Treasury was able to do so by enforcing a so-called third amendment to preferred stock purchase agreements. The amendment allowed the Treasury to take all of Fannie Mae and Freddie Mac's quarterly profits instead.

Fannie Mae and Freddie Mac were seized by the U.S. government in 2008 after risky investments almost toppled them into bankruptcy. Profits were only recorded after $187.5 billion in taxpayer money was given to them as aid.

A representative of the plaintiffs, however, considered the government's actions overreaching and that it exceeded legal boundaries.

The Perry Capital lawsuit is not the first filed against the government. A shareholder seeking a claim worth over $40 billion in damages was also filed last month in the U.S. Court of Federal Claims as a result of the takeover.