Fannie Mae-No Politics (FNMA)

[Patswil]

Judge Reade did not issue an opinion, so the Court's reasoning is not apparent. Nonetheless, the Court ordered FHFA to produce an administrative record by March 10, 2016.

This creates a major problem for FHFA, as FHFA stated in Perry that it did not compile an administrative record regarding the Net Worth Sweep.
In essence, Judge Reade has repudiated Judge Lamberth's decision by not only denying FHFA's Motion to Dismiss, but also by ordering FHFA to produce an administrative record regarding the Net Worth Sweep by March 10, 2016.

This is an extremely noteworthy development for Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) shareholders, but Judge Reade's order does raise the following questions. Judge Reade did not issue an opinion in connection with the court's denying FHFA's Motion to Dismiss, so the court's reasoning is not readily apparent. Moreover, Judge Reade denied FHFA's Motion to Dismiss on the basis that it was "moot", which raises further questions as to Judge Reade's reasoning.

Nonetheless, the result is that Judge Reade has decided that HERA's anti-injunction provision does not withdraw jurisdiction from federal courts to consider the Net Worth Sweep, which was FHFA's principal argument in favor of dismissal in Saxton, and which was the very argument advanced by FHFA in Perry that persuaded Judge Lamberth to dismiss that case.

In an earlier Saxton ruling, Judge Reade deferred the requirement for FHFA to produce an administrative record because she found that FHFA's Motion to Dismiss could be decided without resort to the facts that would be produced in an administrative record. Judge Reade stated:

"If the motions [to dismiss by FHFA] are denied, then the court will set a deadline for filing the administrative record and, presumably, the parties will file motions for summary judgment."

Now, the Saxton court's order requiring FHFA to produce an administrative record in one month poses a particular quandary for FHFA.

In Perry, FHFA stated that it did not maintain an administrative record, which is an Administrative Procedure Act (APA) requirement whenever an agency takes action. The administrative record sets forth the matters considered by the agency in connection with its determination to take the action in question. When an agency's action is challenged, the agency relies upon its administrative record to defend itself.