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Daisey’s premise seems to be: if all FHFA action are invalid, so must be all F/F actions. That seems a bit of a leap.
In any event can you tell from the documentation whether there was an attorney — or was this just filed pro se? Hmm.
As I understand CFPB v CFSA’s ruling in the Fifth Circuit, Congress ceded too much power to the Executive by forever yielding its power of the purse over FHFAs budget.
This premise is true whether Congress is split or whether it is controlled by a single party, because Congress simply has no say, either way.
Any idea of SCOTUS ETA on CFPB v CFSA?
I applaud Davidson’s bill and the idea of a ‘joint resolution of disapproval’ of Sandra’s ridiculous LLPA rule, but the chances of Davidson’s bill actually working out are slim to none.
As the article says, a democratic-majority Senate is unlikely to agree to it, and even if they did, Biden will never sign it.
The Congressional Review Act can be a sharp means of repealing Agency rules, but realistically it has no teeth without ‘single party control’ in Congress and the White House.
Robert I have not read the complaint, just your highlights. I think Kelly is making the best possible argument. I’m just unsure of its effectiveness.
To be sure, an inducement factor is one that is germane to a Taking. Further, the level of inducement was an order of magnitude different than Joe shareholder.
For a Taking, one threshold matter is that the The taking must’ve been done by a sovereign; here, there’s 3 units combined: (1) the Pre-FHFA executive and its alleged policy of JPS inducements, (2) FHFA who declared Conservatorship, and (3) the FDIC who then seized the FBOPs based on Tier 1. IMHO, these 3 actors do seem to be all sovereign actors doing governmental acts (not doing the acts of private parties) so perhaps that first threshold is met. So score one for plaintiffs.
But if I am opposing defense counsel, I first assert that even if there was a Tier 1 JPS incentive, it was an exchange of benefits. Not a unilateral inducement. So no ‘reliance factor’ or estoppel theory can be accorded to P.
Second, again I “pound the law”: per the COFC holding in Wash Fed, after HERA a Shareholder had no immutable right to exclude others thus they could not have had any reasonable investment-backed expectations. That being the case for a simple investor, should a sophisticated investor have expected any different? If anything, a sophisticated investor should’ve known the same —and should’ve known sooner. (An ‘eau contraire’ argument)
This is just one man’s quick napkin sketch reaction here. This is not legal advice nor have I researched or briefed the issues. We shall see. I personally believe the 08 JPS capital raise was a fleecing —but that doesn’t mean I think a legal remedy will necessarily exist or carry the day.
On Rop, SCOTUS simply denied writ of Cert. SCOTUS didn’t do more than that. You are right to question that the article by Liz K says any differently: it doesn’t. It just does a very poor job of stating that fact.
It muddles the meaning by mixing Collins into the article. In the 3 paragraphs preceding the last paragraph, the reporter is referring only to Collins v Mnuchin, not to Rop. Here are the 3 paragraphs I refer to that are completely irrelevant to Rop:
“In 2021, the nation's highest court had rejected shareholders' claims that sought to void a 2021 agreement between the Federal Housing Finance Agency, which oversees Freddie and Fannie, and the U.S. Treasury that allowed the profit sweeps.
At the time, the court upheld that the FHFA's structure was unconstitutional because the agency's sole director is insufficiently accountable to the president. That decision makes it easier for the president to fire the FHFA director.
However, the justices ruled that the lower court erred in letting shareholders challenge the 2021 agreement in separate litigation and sent that part of the case back to lower courts to determine if investors could get relief based on constitutional claims.”
Only in the last paragraph (below) does the reporter refer to the Rop outcome, and even here she muddled the facts by failing to restate clearly that SCOTUS denied the Rop writ of Cert ‘period - end of sentence’.
“The plaintiffs argue that the FHFA acting director was serving in violation of the Constitution's appointments clause when he signed the 2012 agreement with the Treasury Department. The Federal appeals court rejected that argument in October, Bloomberg reported.”
All in all, she uses too many words, and too few of the right words in the right order.
GLTA - Clarence
The CFPB case is interesting.
IMO the ‘guts’ of the Fifth Circuit’s holding of a double-insulated structure is an attempt to appeal to Chief Roberts’ way of thinking, and particularly his majority opinion in Free Enterprise Fund v PCAOB — where a multi-level insulated removal power structure of a government board was found to be constitutionally defective.
I am not sure the analogy works. Even if it does, as you say, Levitin’s brief disputes that there is any double insulation going on, and that the Fifth Circuit has erred there. Looking forward to reading more on the case also.
Robert even if SCOTUS were to take up Calcutt, I don’t think Calcutt has any bearing on the Collins plaintiffs specifically or shareholders generally.
I read the original Stay request and two Amici briefs.
Calcutt’s separation of powers removal restriction (‘SOP’) claim raises two arguments but neither is germane to F/F.
First it’s important to understand the 6th Circuit rejected his SOP claim without ever hearing its merits; they did so by stating that Calcutt could not meet the Collins standard for showing compensable harm.
The court is dead wrong. But it won’t matter to shareholders. Calcutt is right in arguing Collins does not require separation-of-powers challengers to offer concrete proof of prejudice as a prerequisite to courts resolving separation-of-powers challenges to removal restrictions on the merits.
But this is an empty shareholder vessel for another reason: Calcutt seeks a prospective remedy, not a retrospective remedy. The court did err IMHO in their broad-brush application of Collins’ remedy as if it stands for both prospective and retrospective remedy. That is clearly wrong. Collins only sets a rule for backward relief. But Calcutt seeks *prospective* relief. So even a proper reading will not help F/F shareholders (like Collins) seeking a retrospective remedy.
Cheers though, and do I hope the court takes the case for its constitutional basis.
If at some future date F/F are directly nationalized in conservatorship, the MQD is a doctrine that shareholders might use to support a new claim. The claim would state HERA nowhere contemplates turning F/F into socialist pets: to the contrary, HERA clearly lists among Agency goals the importance of maintaining the enterprises as stockholder-owned.
Thumbs up. There is a fair critique of MQD in the working papers.
Right. And the biggest threat to bipartisan bill passage is the inevitable POTUS veto, because a 2/3 override is just a fantasy.
There is an alternative though. When the final rule is published, the house has 60 working days to try to rescind the rule under the Congressional Review Act (“CRA”). The CRA vote would still require a simple majority in both house & Senate, but POTUS cannot veto it.
Robert thanks for the posts.
Agree. Your second post in particular controverts Ano’s non-sequitur leap from Axon to Collins.
To your post, I would add that in the APA claim— including the Anti-Injunction clause and Incidental Powers clause — Justice Alito gave no Chevron deference to any Agency or lower court authority.
This fact — and its 9-0 supporting vote —ought to bang like a drum and underscore the cold reality for APA claim plaintiffs.
I do not know this. I became interested in
Collins *after* the decision by the Fifth. You could try Glen’s #FannieGate website (free) but I don’t know it was ever posted.
FWIW, I see 5 non-shareholders who filed Amicus Briefs in support of petitioner
Patrick Collins (Note: found via ScotusBlog search of Collins v Mnuchin):
1. New Civil Liberties Alliance
2. Pacific Legal Foundation
3. Scholars (David Zaring, Steven Davidoff Solomon, Alexander Platt)
4. Thomas Vartanian (@ George Mason)
5. Americans for Prosperity Foundation
Firstly, H.R. 1382 is not submitted to the Senate. It is waiting review by the House committee on Financial Services. Thus there also has been no House floor vote:
https://www.congress.gov/bill/118th-congress/house-bill/1382/all-info?s=1&r=12
Secondly, Ano’s tweet is misleading. It implies H.R. 1382 affects FHFA, as if it revises HERA. That is false. As I posted yesterday, the text HR 1382 is available. Read it. Nowhere does it revise HERA:
https://www.congress.gov/118/bills/hr1382/BILLS-118hr1382ih.pdf
When might the Senate take up the bill, and when might Biden sign, thus subjecting CFPB (but not FHFA) to Appropriations? First things first. First, Committee. Then floor vote. Then and only then will it tiptoe into the Senate where Barr and his fellow R’s —notably —lack a majority.
“no succession clause” remains
What? How precisely does HR 1382 support that claim?
HR 1382 contains no reference anywhere to the succession clause ((which is codified at 12 USC 4617b(2)(a).))
Rather, the part of HR 1382 you underlined (on page 11 of the PDF version of the bill) merely refers to a piece of FIRREA long dealing with limits on compensation among agencies including FHFA and CFPB ((see FIRREA section 1206(a) at 12 USC 1833b(a).)) Notice HR 1382 here omits any reference to the OFR, thus deleting it. That is the purpose of your underlined section.
LINKS
FIRREA 1206(a) at 12 USC 1833b:
https://www.law.cornell.edu/uscode/text/12/1833b?quicksearch=&quicksearch=1206
HR 1382 with full PDF available:
https://www.congress.gov/bill/118th-congress/house-bill/1382/text?s=1&r=12
Succession clause at 12 USC 4617b(2)(a):
https://www.law.cornell.edu/uscode/text/12/4617
https://www.cutimes.com/2023/03/08/bill-introduced-to-turn-cfpb-into-independent-agency/?amp=1
In a nutshell it would require the CFPB to get its funding approved via the annual Congressional Appropriations process, rather than by a simple money demand request to the Federal Reserve/
Robert IMHO, to answer your question:
The FDIC must follow its implementation act, the FDIA, as amended. I think it depends on the FDIA Incidental Clause.
If the FDIA Incidental Clause still lists “shareholders” (as a few courts indicated in F/F opinions) then the FDIC as conservator or receiver *must* consider shareholder interests, not just the FDIC’s.
But if the FDIA was amended to remove “shareholders”, then under Collins v Yellen, the FDIC can use the Incidental Clause to bypass any and all shareholder interests. In that instance, excess equity might be excluded from shareholders. Likewise, under Fairholme II (Cert. Denied) there would be no taking because shareholders would lack the right to exclude as of the (hypothetical) date FDIA was amended, thus they lack a cognizable property interest.
Correct
The Collins district court’s most recent decision invoked the discretionary “mandate rule” to dismiss Plaintiffs’ Appropriations Clause claims on procedural grounds.
If I could gratuitously ask someone to link us this decision, I can copy & highlight the precise relevant parts.
I don’t know but that is possible.
I suspect all parties would be in favor of the delay if prudence and economy dictate that option. And we do know that an Appropriations claim will be heard (and on its merits) at SCOTUS in CFPB v CFSA.
One thing gives me pause, though: the Collins appellate panel dismissed the Appropriations claim on a *procedural basis*.
So perhaps the Fifth Circuit en banc would proceed to hear the Collins case in full, but then limit its opinion on the Appropriations claim to that very narrow procedural basis.
Should the en banc find for the plaintiffs, it would simply vacate the panel decision and remand the Appropriations claim back to district court for full review on merits in the first instance. Now, at that future point, certainly the district court would wait for the result of CFPB v CFSA.
Just a thought. I’m probably wrong.
Oops. Fall 2023. Let’s call it a typo.
“Do you think the CFPB case will be argued this Fall?”
Yes I would presume in Fall 2022.
“Will the SCOTUS decide that financial regulator agencies are somehow different and the Appropriations Clause protections don't apply to them?”
No, I think in CFPB v CFSA SCOTUS will decide only the question before it: whether the CFPB can live outside Appropriations.
The holding will be confined to instances of an At-will single Director, wielding immense economic power, and drawing funding outside Appropriations via a unique double-insulated structure.
“If no, then how can the Federal Reserve Board avoid review of Congressional Appropriations Oversight?”
Because the concern in CFPB v CFSA is not the absence of Appropriations per se. It rather is the threat to liberty and the risk of tyranny (I.e. a threat to the separation of powers) by taking Congress’ purse power and *handing it over to POTUS*.
This constitutional threat is clear and obvious in a single at-will Directorship.
In contrast, for an agency run by a Board, the threat is diminished (IMHO).
In Seila Law v CFPB, Chief Roberts used the FTC Board as an example of strong structural accountability in the Removal clause sense. The illustrated factors that make boards accountable also deter the threat of tyranny. IMHO this will effectively imply that financial regulators run by boards can continue to live outside Appropriations —without the court having to say so expressly.
Yes from listening to the oral argument it sounds like their standing argument was novel: as student loan debtors they didn’t benefit from the executive action —but they believe they *would likely have benefited had a rule been promulgated under notice & comments*.
I don’t know what lower courts said about their standing, but is there even a concrete particularized injury? Is the remedy too speculative? Interesting.
Louie_ Ineed to put some thought into that answer and do it in a separate post—Probably a separate post for each. But there is clearly some possible read-through. At a glance the Appropriation clause might be the stronger possibility.
Thank you for your comment.
“…does SCOTUS then toss the states?”
Only if the other states lack Article III standing and prudential (judge made) standing. Just because MO might rely on its enterprise MOHELA does not mean the other states have necessarily failed standing.
I haven’t yet examined very closely the other states’ standing, or the individual debtors’ standing—just Missouri’s.
I think MO’s loss of an exchanged-for benefit (in lieu of a fund payment) —that being the very likely loss of about 40% of prior levels of scholarship funds, is not speculative; IMO it’s a reasonable concrete expectation…but reasonable minds can differ.
No, we are talking about student loan borrowers. But none of the plaintiffs in thestudent loan case are generalized grievance tax payers. If they were they would not meet Article III. You need a discrete particularized injury and it must be redressable.
If the hypothetical student loan plaintiffs injury was the same as all tax payers, court has held its a political not a court decision. I think that’s a flaw of tax payers but not of the loan debtors.
Who is claiming that they cannot and why? My comment was limited to problems with Missouri, in case that was not clear.
Some early broad commentary from a regulatory law firm on the CFPB case on where some battle lines may be drawn.
https://www.mcglinchey.com/insights/taking-the-case-scotus-to-decide-constitutionality-of-cfpb/
Missouri is claiming a different harm than the other five states.
Read Professor Josh Blackmon’s comments on states’ standing in this case.
Missouri is suing because it has a state owned enterprise (MOHELA) that in theory contributes to state revenue —but which in reality has paid in very little recently. But one dollar of harm could in theory suffice for a concrete injury. Thus a decision could go either way.
https://abcnews.go.com/amp/Politics/supreme-court-case-biden-student-debt-relief-hinge/story?id=97445430
I think we just have to wait & see on MQD.
I think the court will find standing for enough of the petitioners. It’s a low bar.
I’d expect Chief Roberts to lead off the questioning, as usual. One of the questions will attempt to illustrate that there seems to be no limiting principle to the government’s interpretation of the HEROES Act.
Gorsuch loves his pet indeterminate multi-factor test for MQD, so it’ll be interesting to hear if he tries to rally others to his flag as by citing authority along those lines.
Looking forward to reading the transcript because I will not be able to listen live.
I agree. Only CFPB’s petition was granted.
https://www.supremecourt.gov/orders/courtorders/022723zor_6537.pdf
I agree.
Robert
As always I appreciate your discussion efforts. I have not studied the student loan case in any detail (yet) for its fit in MQD.
But I will note that some of these early, lower-court struggles about MQD were predicted by Professor Thomas Merrill. Linked for you is his 5-part MQD blog (slightly beyond a “basic” primer) covering West Virginia v EPA (2022).
I started you at part 3 of 5, but you can access the other 4 parts from within the article. By my personal count there’s precious few Agency Law scholars more notable than Tom Merrill.
https://reason.com/volokh/2022/07/28/west-virginia-v-epa-questions-about-major-questions/?itm_source=parsely-api
“In all cases - be it Chevron or MQD - first the courts need to decide if the issue - action - is NOT clearly excluded or included by the words in the legislation done by Congress --- if not clear - then the fun begins.”
Actually the inquiries under Chevron and MQD differ.
In a Chevron review, yes, a court’s 1st inquiry is whether Congress has spoken unambiguously in a statute. If the answer is no (i.e., SOME ambiguity exists), then courts must defer to plausible Agency interpretations. Further, under City of Arlington v FCC (2013), an Agency is effectively free to *delineate the scope of its own regulatory mandate* unless it is clear Congress did not confer that precise authority. (Wow!!!)
Under West Virginia v EPA, the court’s 1st inquiry is whether the agency is seeking to regulate in a manner that presents a "major question" of "economic and political significance." If the answer is yes, the court asks, second, whether there is a "clear statement" by Congress conferring such authority. In the absence of a clear statement, the agency will be held to have exceeded the scope of its authority. MQD textual analysis is limited to looking for a “clear statement” of authorization. It changes the order and scope of any orthodox statutory analysis.
In summary (and at the risk of somewhat overgeneralizing) IMO this appears to be the change:
CHEVRON (‘BEFORE’)
If any ambiguity, courts must defer unless authority clearly withheld by Congress
WEST VA v EPA (‘AFTER’)
If any MQD, court cannot defer absent a “clear statement” of authority by Congress
The CNN author Joan Biskupic is a Marquette lawyer, biographer and journalist, and is highly respected. She leans toward personal conservatism but her writing is fair and balanced, and the CNN article reflects that.
I have read her book on Scalia “American Original” and it’s very good.
https://joanbiskupic.com/
“I guess the point I'm extrapolating is that if the U.S. Court of Appeals decided an administrative agency (like the CFPB) was unconstitutional then that would be the law of the land unless SCOTUS overturned it.”
Yes if you are referring to the US Court of Federal Claims(“COFC”) and its appeals court (“CACOFC”) then that is a true statement or hypothetical. So your more general point (as I think I understand it) is well taken.
But neither the COFC nor the CA COFC has general authority to issue injunctive relief, only monetary relief**.
The CFSA seeks equitable or injunctive relief against the CFPB (not a money judgment), hence, it had to be filed outside the COFC and thus any appeal could not be heard in the CACOFC.
*Case law support:
Richardson v. Morris, 409 U.S. 464, 465 (1973) (“[T]he [Tucker] Act has long been construed as authorizing only actions for money judgments and not suits for equitable relief against the United States.”);
Bowen v. Massachusetts, 487 U.S. 879, 905 (1988) (“The Claims Court does not have the general equitable powers of a district court … ‘the Court of Claims has no power to grant equitable relief.’” (quoting Richardson, 409 U.S. at 465)).
“If that case would have been decided in the U.S. Court of Appeals, regardless of district, it would have nationwide precedence.”
False. You are confusing jurisdiction with binding precedent. They are separate.
Wrong. Circuits disagree all the time on constitutional issues. That’s not a flaw, it’s by design. Civics 101. See for example
https://www.law.com/nationallawjournal/2022/12/21/circuit-splits-to-watch-in-2023/?slreturn=20230116115241