Law Firms
Wachtell Takes Credit for Drafting Mortgage Giants’ Rescue Agreement
Posted Sep 11, 2008, 05:54 am CST
By Debra Cassens Weiss
Seventeen lawyers from Wachtell, Lipton, Rosen & Katz drafted the agreement governing the Treasury Department’s takeover of Fannie Mae and Freddie Mac, according to a lead partner on the legal team.
Lawyer Harold Novikoff says lawyers worked on the contract governing the rescue for two-and-a-half weeks, reports The BLT: The Blog of Legal Times. “There were endless term sheets, and almost endless drafts,” he told the blog. He later told Legal Times the work was done on a pro bono basis.
Wachtell advised the Treasury Department and was one of several law firms involved in the takeover negotiations. Under the agreement, Fannie Mae and Freddie Mac will be placed into a conservatorship, and their chief executives will be replaced. The government will fund the companies in any quarter in which they are insolvent at a cost of up to $100 billion for each lender. In exchange, the government received $1 billion worth of preferred stock in each company.
Other law firms represented Treasury Department bailout adviser Morgan Stanley, Freddie Mac and Fannie Mae. They included Cleary Gottlieb Steen & Hamilton; Covington & Burling; Davis, Polk & Wardwell; Cravath, Swaine & Moore; and Sullivan & Cromwell.
Updated at 6:45 p.m. to include information that Wachtell's work was done on a pro bono basis.