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That's the thing. That's what Senator Warren and other progressives did when they insisted the CFPB and FHFA be as independent as possible. They insulated the FHFA and CFPB's Director from being fired by the POTUS (I suspect we just might be out of the Conservatorships IF Mel Watt was replaced on Day 1 with MC) AND made sure that the US Congress could not exercise their power of the purse over CFPB and FHFA by letting the federal agencies set their annual operating budgets so long as they are "reasonable" and having the funding derived from a 3rd party and NOT Congress.
I'm pretty sure that the SCOTUS will want to chime in here and they may have come to the realization that these federal agencies are just out of control (how can 1 Unelected Bureaucrat Nationalize the GSES?) and delegating Congressional Appropriations to federal agencies is inconsistent with the checks and balances inherent in our system of Government.
I mean why not have ALL federal agencies set their own annual operating budgets so long as they are "reasonable" and extract the funding from 3rd parties?
Let's let the IRS do it and extract the funds from the tax receipts they can extract from the American Citizens and their businesses!
Go ahead and email Elizabeth Warren now, she'll start getting all giddy! !
David Maxwell as I recall was a lawyer from Philadelphia (originally MN) that ran a either Title Insurance company or MI company.
He was just a nice guy! I had a blast working there, Tom Lawler left his office door open all the time and I would chit chat with him all the time about the Portfolio, cool trading desk too.
You're the best, thanks! How this bizarre drama ends is anyone's guess and by all means critique anything I or anyone else says on the board, and if it's a legal idea I propose, you know with 100% that the federal government will bring it up as a counter Argument.
Good times, good times! David Maxwell told me either during his farewell tour (that was a NICE touch!) or at the end of year annual holiday party, that the biggest risk for the stock was 'political risk' and that is SO TRUE!
I suspect that's why he hand picked Jim Johnson (DC power broker and a MN boy himself) to succeed him.
JJ passed a year or two ago any idea if David Maxwell is still alive?
"The Supreme Court will meet this Friday to consider whether to grant review in a group of around 95 petitions and motions. They will be considering eight cases for the second time.
The highest profile of the bunch are undoubtedly rival twins Consumer Financial Protection Bureau v. Community Financial Services Association of America, Ltd. and Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau, involving yet another juicy separation-of-powers issue. This one arises from the financing mechanism used for the Consumer Financial Protection Bureau, established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of the financial crash that precipitated the Great Recession.
To insulate the agency from influence by politicians, Congress provided that the president could remove the CFPB’s director only for “inefficiency, neglect of duty, or malfeasance in office,” and it provided that the agency would derive funding not from annual appropriations of Congress (which might withhold funding to place pressure on it), but from the operating reserves of the Federal Reserve, which is itself funded outside the appropriation process through bank assessments. Three terms ago in Seila Law v. Consumer Financial Protection Bureau, the justices ruled by a 5-4 vote that Congress violated the separation of powers when it placed the CFPB under the control of a single director removable by the president only for cause. But the court declined to invalidate the entire agency for this structural flaw, instead severing the for-cause provision from the rest of its authorizing statute.
Two financial associations sued the CFPB after the agency issued a rule cracking down on payday lenders. The U.S. Court of Appeals for the 5th Circuit rejected most of the lenders’ challenges, but agreed with the challengers that the CFPB’s funding mechanism violates the clause in Article I, Section 9 of the Constitution requiring congressional “Appropriations” for any “Money … drawn from the Treasury.” The court vacated the payday lending rule “as the product of the Bureau’s unconstitutional funding scheme.”
The decision was catastrophic enough for the CFPB – basically, disabling the agency from acting across a fairly broad swath of territory – that the government prepared its petition with uncharacteristic dispatch, filing in less than 30 days. The government argues that the Constitution permits Congress to fund the CFPB this way, and Congress has long funded other agencies through similar means. Even if the justices disagree, the government maintains that portions of the funding mechanism can be invalidated without jeopardizing the entire CFPB. The lenders filed a conditional cross-petition arguing that if the court takes the CFPB’s petition, it should take two other issues that might also invalidate the rule."
https://www.scotusblog.com/2023/02/another-separation-of-powers-case-press-access-to-trials-and-maritime-insurance/
Remember the annual Employee stock options? JUICY! I was there when David Maxwell was there, then Jim Johnson (rip), and lastly Franklin Delano Raines. 4000 Wisconsin and you?
The purpose of the Appropriations Clause is to make sure the Executive branch DOESN'T have power in the form of the Sword (they enforce the laws and have lethal authority to implement some of them) AND the Power of the Purse. Here, 2 federal agencies the cfpb and FHFA, controlled by the Executive branch (POTUS), set their own funding so long as it is "reasonable" and takes the funds from the institutions they regulate. Where's Congressional budgetary oversight?
Hera and Dodd frank were set up during a time of crisis and the cfpb funding structure proved a Constitutional violation of the Separation of Powers in the 5th circuit. We'll probably know by the end of next summer whether or not the SCOTUS agrees.
Thanks Neo! I've been holding this stock since I worked at Fannie Mae from 1988-1993, (TH had a mustache back then and was already in Sr. Mgmt!)
I've invested in the GSES for decades and am saddened and as frustrated as everyone and would prefer this bizarre drama end ASAP!
But I've accepted the fact that it's unlikely to be resolved quickly, simply because the federal government is so recalcitrant about the NWS and accepting zero culpability for their bad acts here.
You're a great well reasoned contributor and I hope you hang around and give us your wisdom, I can tell you likely have advanced degree(s) in probably business or something and your insights are always welcome here I hope.
The Constitutional arguments surrounding this fact pattern are outstanding and maybe, just maybe, we can get our companies back and make our government work better in the long run.
That's the CFPB'S s brief, isn't it? Here's the opposing argument from Noel Francisco (btw, the SCOTUS may likely accept the CFPB'S Petition simply to clarify the issue in the 5th Circuit, regardless of whether or not there's a conflict in the federal circuits):
B. Further Percolation Is Warranted For
The Appropriations Clause Question
Denying certiorari also would be prudent because
it would enable further percolation of the novel and
important constitutional question. No other court of
appeals has passed on it. Contrary to the Bureau’s
assertion (Pet. 28-29), the D.C. Circuit did not decide
an Appropriations Clause claim in PHH Corp. v.
CFPB, 881 F.3d 75 (D.C. Cir. 2018) (en banc). It held
only that “[t]he CFPB’s budgetary independence …
does not intensify any effect on the President of the
removal constraint.” Id. at 96. Moreover, insofar as
that court invoked a purported “tradition of
independent financial regulators,” id. at 95, this
Court has since held that “the CFPB is in an entirely
different league,” Seila Law, 140 S. Ct. at 2202 n.8.
"Further percolation would be especially useful so
lower courts could address how the nondelegation
doctrine relates to the Appropriations Clause claim.
Even though the Fifth Circuit stressed the “self-
actualizing,” “self-determined,” and “self-direct[ed]”
nature of the CFPB’s funding scheme, Pet.App. 33a,
35a, 41a n.16, it artificially refused to consider the
nondelegation doctrine. And its rationale—that the
Lenders had “forfeited” this “argument” in district
court, Pet.App. 24a n.6—is flawed. See Lebron v.
Nat’l R.R. Passenger Corp., 513 U.S. 374, 378-79
(1995) (“once a federal claim is properly presented, a
party can make any argument in support of that
claim,” including even “a new argument” that was
“expressly disavowed” below (cleaned up)). As a
result, although nondelegation principles are directly
responsive to many of the Bureau’s arguments, see
supra at 18-19, 20, 23, 24-25, the Bureau’s petition
fails to say anything about them. This aspect of the
question presented would be much better developed
after additional lower-court litigation.
Conversely, the Bureau considerably overstates
the “legal and practical significance of the decision
below.” Pet. 29. The Bureau admits that the
judgment below “did not change the rules governing
regulated entities” because the Rule has been stayed
and never gone into effect. Pet. 10 n.3. In fact, the
Bureau does not even assert that the Rule’s vacatur
is itself cert-worthy. The Bureau instead cites a few
cases where parties challenging other agency actions
have cited the Fifth Circuit’s opinion, and it fears
that “[n]ew challenges” will soon follow. Pet. 29. Of
course, granting certiorari in this case will not solve
the Bureau’s concern if the antecedent grounds for vacating the Rule end up precluding the Court from
reaching the Appropriations Clause question—
indeed, it might delay the Court’s resolution if a
second case must be taken and decided.
Moreover, the Bureau has hardly ground to a halt
under the shadow of the Fifth Circuit’s decision. It
continues to plow full steam ahead, initiating and
pursuing enforcement actions and even recently
proposing new regulations. See CFPB, Newsroom,
https://bit.ly/3YCnQ7q (last visited Jan. 11, 2023). It
has urged courts outside the Fifth Circuit to reject
the decision below. See, e.g., CFPB v. TransUnion,
No. 22-cv-1880, 2022 WL 17082529, at *4-5 (N.D. Ill.
Nov. 18, 2022). It cites only a single pending case
where the Fifth Circuit’s decision would be binding,
Pet. 29, and the Lenders are aware of only a handful
more. If and when some judgment in some future
case has “major practical effects,” id., the Bureau
should seek this Court’s review then—which may
well present a better vehicle.
Finally, if the Administration is concerned about
the CFPB’s ongoing activities, it can seek interim
appropriations until this Court resolves the funding
statute’s validity. In fact, legislation was introduced
last month to fund the agency through annual
appropriations. See U.S. Senate Comm. on Banking,
Hous., & Urb. Affs., Toomey, Hagerty Introduce Bill
To Make CFPB Accountable to Congress (Dec. 15,
2022), https://bit.ly/3j9Ixrb. And if the President and
Congress are unwilling or unable to enact even a
temporary legislative patch, that underscores the
constitutional problem with the CFPB’s permanent
funding scheme.
III. AT MINIMUM, THE CASE SHOULD BE HEARD
NEXT TERM WITH EXPANDED BRIEFING
Even if the Court decides to grant certiorari, it
should not do so in the unreasonable manner the
Bureau proposes. "
http://www.supremecourt.gov/DocketPDF/22/22-448/252221/20230113130438937_22-448%20bio.pdf
That's interesting. ROLG maintains that the Statue of Limitations has tolled but I always thought that Constitutional Challenges to federal government action cannot be time barred. So what is the Statute of Limitations for challenging a federal agency action that is alleged to be unconstitutional? Wouldn't a Statute banning Constitutional Challenges to federal government action be itself unconstitutional?
The federal government made that specific argument, here's what the 5th Circuit Appealate Panel Decision said, "The Bureau relies on the Supreme Court’s statement that the
Appropriations Clause “means simply that no money can be paid out of the
Treasury unless it has been appropriated by an act of Congress.” Richmond,
496 U.S. at 424 (quoting Cincinnati Soap, 301 U.S. at 321). But neither
Richmond nor Cincinnati Soap purported definitively to map the contours of
the Appropriations Clause. Regardless, Congress’s mere enactment of a law,
by itself, does not satisfy the clause’s requirements. Otherwise, the Bureau’s
position means that no federal statute could ever violate the Appropriations
Clause because Congress, by definition, enactsthem. As discussed supra, our
Constitution’s structural separation of powers teaches us that cannot be so.
Cf. New York v. United States, 505 U.S. 144, 182 (1992) (“The Constitution’s
division of power among the three branches is violated where one branch
invades the territory of another, whether or not the encroached-upon branch
approves the encroachment.”).
"The converse argument, that Congress can alter the Bureau’s
perpetual self-funding scheme anytime it wants, curing any infirmity, is
likewise unavailing. “Congress is always capable of fixing statutes that
impinge on its own authority, but that possibility does not excuse the
underlying constitutional problems. Otherwise, no law could run afoul of
Article I.” All Am. Check Cashing, 33 F.4th at 238 (Jones, J. concurring); cf.
PHH Corp. v. CFPB, 881 F.3d 75, 158 (D.C. Cir. 2018) (en banc) (Henderson,
J., dissenting) (“[A]n otherwise invalid agency is no less invalid merely
because the Congress can fix it at some undetermined point in the future.”),
abrogated on other grounds by Seila Law, 140 S. Ct. 2183.
The Bureau also contends that because every court to consider its
funding structure has deemed it constitutionally sound, we should too.15 But
carefully considering those decisions, we must respectfully disagree with
their conclusion. Those courts found the constitutional scale tipped in the
Bureau’s favor based largely on one factor: a handful of other agencies are
also self-funded. For instance, the D.C. Circuit emphasized that “Congress
has consistently exempted financial regulators from appropriations: The
Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration,
and the Federal Housing Finance Agency all have complete, uncapped
budgetary autonomy.” PHH Corp., 881 F.3d at 95.
Such a comparison, focused only on whether other agencies possess a
degree of budgetary autonomy, mixes apples with oranges. Or, more
accurately, with a grapefruit. Even among self-funded agencies, the Bureau
is unique. The Bureau’s perpetual self-directed, double-insulated funding
structure goes a significant step further than that enjoyed by the other
agencies on offer. And none of the agencies cited above “wields enforcement
or regulatory authority remotely comparable to the authority the [Bureau]
may exercise throughout the economy.” All Am. Check Cashing, 33 F.4th at
237 (Jones, J., concurring); see also William Simpson, Above Reproach: How
the Consumer Financial Protection Bureau Escapes Constitutional Checks &
Balances, 36 Rev. Banking & Fin. L. 343, 367–69 (2016).16 Taken
together, the Bureau’s express insulation from congressional budgetary
review, single Director answerable to the President, and plenary regulatory
authority combine to render the Bureau “an innovation with no foothold in history or tradition.” Seila Law, 140 S. Ct. at 2202. It is thus no surprise that
the Bureau “brought to the forefront the subject of agency self-funding, a
topic previously relegated to passing scholarly references rather than front-
page news.” Charles Kruly, Self-Funding and Agency Independence, 81 Geo.
Wash. L. Rev. 1733, 1735 (2013).
We cannot sum up better than Judge Jones did:
[T]he [Bureau]’s argument for upholding its funding
mechanism admits no limiting principle. Indeed, if the
[Bureau]’s funding mechanism is constitutional, then what
would stop Congress from similarly divorcing other agencies
from the hurly burly of the appropriations process? . . . [T]he
general threat to the Constitution’s separation of powers and
the particular threat to Congress’s supremacy over fiscal
matters are obvious. Congress may no more lawfully chip away
at its own obligation to regularly appropriate money than it may
abdicate that obligation entirely. If the [Bureau]’s funding
mechanism survives this litigation, the camel’s nose is in the
tent. When conditions are right, the rest will follow.
All Am. Check Cashing, 33 F.4th at 241 (Jones, J., concurring). The Bureau’s
funding apparatus cannot be reconciled with the Appropriations Clause and
the clause’s underpinning, the constitutional separation of powers."
Thanks Chess, I was answering Do Nots question about the Takings Cases and in those cases as I'm sure you are aware, the last court to rule on it was an Appealate Court that denied the Appeal. Then SCOTUS denied the Plaintiff Shareholders Petition for a Writ of Certerrori and so the case ended at the SCOTUS.
Thanks again Family! TH isn't a big fan of the Federalist Society and their sometimes deep roots in the federal judiciary. He may be right that all future legal challenges to the 14+ year CONservatorships will end after leaving the SCOTUS!
ROLG, seems to believe that the SOL has run on any challenges to the 14+ year CONservatorships.
I'd like to find specifically which Statute(s) of Limitations he is specifically referring to and whether or not any variables possibly exist in the fact pattern that would circumvent the SOL(S).
For instance, if it's a 3 year SOL, couldn't one challenge the last 3 years of equity sweeps? Which specific agency actions are tolled?
But I appreciate both of these knowledgeable individuals contributions over the years and hope they continue to contribute with their vast array of knowledge in this area.
Thanks again, Family! As I recall, I did a cursory review of the government's claim that another Circuit ruled that the Appropriations Clause was NOT violated.
I also recall David Thompson or someone refuting that claim or stating that the Appropriations Clause was ancillary to the DC Circuit case, again I believe.
If you could kindly find a link to the DC Circuit case, I can read it in it's entirety. Was it PHH v CFPB?
Great quotes, thanks Rodney!
Once the SCOTUS rules, it ends litigation on the that specific question presented to it. Apparently the NWS was NOT a Taking under the 5th Amendment of the US Constitution, because the Plaintiff Shareholders had no right to exclude the government with their property, so that particular Constitutional Claim appears to have ended.
The remedy for a Constitutional Violation under the MQD would likely be an invalidation of the federal agency action, here the NWS.
The drafters of the response letter may not have read the 5th Circuit Appealate Panel opinion in the CFPB case.
The federal government simply argues that the Appropriations Clause says that only the US Congress may transfer money from the US Treasury to pay for stuff, here, the CFPB isn't transferring ANY money from the US Treasury is it?
The CFPB is extracting the money to run its operations (approaching $1B/yr-have you seen the new palatial CFPB HQ !) from up to 12% of the Federal Reserve's funds which in turn extracts its funds from the 'evil financial intermediaries ' which extracts its funding from their customers .
Here's what the Appropriations Clause says, "the Constitution's appropriations clause, which reads: "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."
Do you understand now?
Is the CFPB funding Constitutionally okay or not?
• Net income of $1.8 billion, a decrease of 36% year-over-year,
primarily driven by lower net revenues and a credit reserve build in
Single-Family
• Net revenues of $4.8 billion, a decrease of 13% year-over-year,
primarily driven by a decline in non-interest income
• Provision for credit losses of $0.6 billion, up from $0.1 billion in the
fourth quarter of 2021, primarily driven by declining observed and
forecasted house price appreciation, partially offset by lower
purchase volumes
• New business activity of $75 billion, down 72% year-over-year, as
refinance activity slowed due to rising mortgage interest rates. Full-
year 2022 activity of $541 billion, down 56% year-over-year
• Mortgage portfolio of $3.0 trillion, up 7% year-over-year, driven by
an increase in average portfolio loan size and a higher share of
single-family mortgage debt outstanding
• Serious delinquency rate of 0.66%, down from 1.12% at December
31, 2021, primarily driven by a decline in loans in forbearance
• Completed approximately 22,000 loan workouts
• 61% of mortgage portfolio covered by credit enhancements
• New business activity of $29 billion, up 16% year-over-year. Full-
year 2022 activity of $73 billion, up 4% year-over-year, primarily
driven by a larger loan purchase cap available during 2022
• Mortgage portfolio of $429 billion, up 3% year-over-year, primarily
driven by new business activity, partially offset by increased
borrower payoff activity driven by market conditions
• Delinquency rate of 0.12%, up from 0.08% at December 31, 2021
• 93% of mortgage portfolio covered by credit enhancements
"In a year with significant
volatility and a challenging
macroeconomic
environment, Freddie Mac
made home possible for
2.5 million families, while
delivering solid financial
results. Looking ahead,
we expect to place even
more emphasis on our
mission by further
advancing our affordable,
sustainable, and equitable
housing plans without
compromising safety and
soundness. We expect to
accomplish these
objectives by leveraging
our talented workforce,
collaborating with market
participants to find new
solutions, and
continuously working to
effectively manage risk.
These actions will enable
Freddie Mac to continue
to build financial strength
and stability that is central
to fulfilling our mission."
Michael J. DeVito
Chief Executive Officer
Net Worth -
$37.0 Billion
Full-Year 2022 Financial Results
Freddie Mac reported net income of $9.3 billion for full-year 2022, a decrease of 23% year-over-year, primarily
driven by a credit reserve build in Single-Family.
Net revenues were $21.3 billion for full-year 2022, down 3% year-over-year, as higher net interest income in
Single-Family was offset by a decline in non-interest income in Multifamily. Net interest income for full-year 2022
was $18.0 billion, up 2% year-over-year, as continued mortgage portfolio growth and higher average portfolio
guarantee fee rates were partially offset by lower deferred fee income due to slower prepayments as a result of
higher mortgage interest rates.
Non-interest income for full-year 2022 was $3.3 billion, down 25% year-over-year,
primarily driven by a decrease in net investment gains in Multifamily.
Provision for credit losses was $1.8 billion for full-year 2022, compared to a benefit for credit losses of $1.0 billion
for full-year 2021, primarily driven by declining observed and forecasted house price appreciation.
Non-interest expense for full-year 2022 remained $7.8 billion, as higher credit enhancement expense driven by a
higher volume of outstanding credit risk transfer transactions and higher spreads on transactions executed during
2022 was offset by a benefit for credit enhancement recoveries due to an increase in expected credit losses on
covered loans.
Full-Year 2022
Net income of $7.9 billion, down 10% year-over-year.
• Net revenues were $18.8 billion, up 9% year-over-year. Net interest income was $17.1 billion, up 5% year-
over-year, as continued mortgage portfolio growth and higher average portfolio guarantee fee rates were
partially offset by lower deferred fee income due to slower prepayments as a result of higher mortgage interest
rates. Non-interest income was $1.7 billion, up 77% year-over-year, primarily driven by gains on commitments
to hedge the Single-Family securitization pipeline in the first quarter of 2022.
• Provision for credit losses was $1.8 billion for full-year 2022, compared to a benefit for credit losses of $0.9
billion for full-year 2021, primarily driven by declining observed and forecasted house price appreciation.
So long as there are viable Constitutional Challenges pending in the federal courts, the status quo of rebuilding capital organically (which is really what a conservator is suppose to be doing) will likely continue.
The Executive Branch may be hesitant to attempt another $100B+ cash grab from their wards if the major decision makers in the federal government realize that the shareholders may eventually prevail on one or more of their Constitutional Claims. The current administration may or may not be a little 'gun shy' if the $400B student loan forgiveness program is ruled unconstitutional under the MQD or for another reason.
That's why it's a worthy endeavor to consider brainstorming potentially viable Constitutional Challenges and debating the pros and cons.
If the FHFA's stated goal is to follow the law in HERA and truly rehabilitate the GSES and prepare them to exit the conservatorships, then organically rebuilding capital in the status quo is a viable solution.
A court order invalidating the NWS would be a means to an end of rehabilitation and exiting the conservatorships.
Thanks, I hadn't seen those posts yet! They could be absolutely right, but there's only one way to know for sure.
The SCOTUS or any of the federal Appellate Courts could easily say no the MQD doesn't apply and the SCOTUS said in Collins that the NWS was a statutorily permissible agency action.
But the specific question has yet to be litigated and there is no end to the 14+ year "temporary conservatorships" in sight.
Why not give one or more of the federal Circuits a chance to answer the specific question, all they can say is no, and we will continue to be stuck here with all our Economic and Voting Rights obliterated, assuming no meaningful litigation remedy victories from the outstanding litigation?
Clearly the SCOTUS (and rarely Judges) understand what happened here and the more educated they become the better their decision making will become.
In today's oral arguments on the Section 230 Internet Statute, Elena Kagan said: “These are not, like, the nine greatest experts on the internet,”
Here's Amy Howe today: "The justices also took no action on a petition for review filed by the Consumer Financial Protection Bureau, which has asked the justices to overrule a decision by the conservative U.S. Court of Appeals for the 5th Circuit holding that the agency’s funding mechanism violates the Constitution – and, as a result, a rule issued by the CFPB is invalid. The CFPB says that allowing the lower court’s decision to stand could raise “grave concerns” for “the entire financial industry.”
The justices’ next conference is Friday, Feb. 24; the court is expected to release orders from that conference on Monday, Feb. 27, at 9:30 a.m."
https://www.scotusblog.com/2023/02/court-declines-to-hear-case-on-whether-defense-attorneys-are-obligated-to-seek-favorable-plea-deals/
That's what I personally find so appealing ( ) about the MQD !
The idea that the US Congress gave DeMarco the power to decide whether or not to Nationalize the 2 lynchpins of the US Secondary Mortgage Market via an INCIDENTAL POWER provision in HERA ("the FHFA can act in the best interests of itself and by extension the public it serves") seems like a MQD constitutional challenge waiting to happen.
What do YOU think?
Did the US Congress give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA?
Wouldn't the US Congress have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do "whatever it feels is in its best interests"?
According to this letter in the WP today, in response to George Will's 2 recent articles on the CFPB case, the financing structure of the CFPB (and FHFA?) is perfectly acceptable:
"The CFPB is constitutional
George F. Will claimed in his Feb. 16 op-ed, "Reining in the CFPB should be a no-brainer," that the Consumer Financial Protection Bureau is unconstitutional. But he only illustrated the readiness of some conservatives to prioritize their political agenda over the Constitution's text, the original understanding of its meaning and the judiciary's limited role in our democracy.
Mr. Will complained that Congress funded the CFPB the same way it has long funded nearly all financial regulators: Instead of drawing money only from the Treasury, these agencies fund themselves through fees and investments, ensuring a predictable revenue stream. Mr. Will wrote this violates the Constitution's appropriations clause, which reads: "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Left unexplained is how a restriction on drawing money from the Treasury is violated when money isn't drawn from the Treasury. As the Constitution's text reflects, the appropriations clause empowers Congress to control the executive branch by prohibiting unauthorized spending. It doesn't empower judges to dictate how Congress funds agencies. Nothing in the Constitution requires funding by annually appropriated Treasury withdrawals. Indeed, Congress has been creating self-funding agencies since the founding. Moreover, Congress retains ultimate control over the CFPB's budget: As Brett M. Kavanaugh noted in 2016 when he was a judge on the U.S. Court of Appeals for the D.C. Circuit, "Congress can always alter the CFPB's funding in any appropriations cycle (or at any other time)."
Mr. Will might be disappointed that Congress has not done so, but the Constitution leaves that political choice with the people's elected representatives.
Brian Frazelle, Washington
The writer is senior appellate counsel at the Constitutional Accountability Center."
Well 1st of all, I certainly didn't see the NWS coming nor the tortured Plaintiff Shareholders ruling from the SCOTUS in Collins.
That's the problem with rolling the dice in litigation, it's difficult to know what the triers of fact are thinking, much less how they will rule.
But again pure speculation, I think that the SCOTUS will take the CFPB case unless they want to let the issue percolate in the other 12 federal district courts.
It would be a better outcome from a purely selfish shareholders standpoint for the SCOTUS to deny the CFPB Petition, have the 5th Circuit accept the Appropriations Clause Claim on appeal, and later rule in our favor in the 5th and then survive the Appealate process.
But here's the twist, suppose that happens and THEN one or more of the federal circuit courts rules that the Appropriations Clause is okay. Then the SCOTUS rules to reverse the 5th Circuit Appealate decision and hold the Appropriations Clause okay.
Tom Merrill is clearly a well versed, knowledgeable, and experienced Columbia Law Professor and a great source on Administrative Law. Thanks for the link!
These federal agencies have come along way since the 1st one (the ICC) was created and seem to absolutely untouchably dominate the lives of Americans and their businesses and are in essence mini governments with all the indicia and virtually unrestrained legislative, judicial, and executive powers delegated to them.
Personally, do you believe that this is what the founding fathers had in mind?
Aren't more guardrails required by the courts if the SCOTUS is indeed moving towards a Unitary Executive?
What we are witnessing 1st hand (for the last 4 or 5 POTUS'S at least) is a disturbing trend, when the POTUS can't get what he wants from the US Congress he simply has one of his 100's of federal agencies find an obscure and/or sometimes broad statutory sentence and interpret it to fit his latest agenda. The student loan forgiveness case is just the latest example.
Maybe or maybe not the SCOTUS will address this next week during oral arguments in the student loan cases and eventually provide more clear cut rules for the MQD.
You're doing a great job here and thanks again!
Here's the Question Presented (that needs clarification by the SCOTUS):
2. Whether Collins v. Yellen, 141 S. Ct. 1761 (2021)
requires separation-of-powers challengers to offer con-
crete proof of prejudice as a prerequisite to courts resolv-
ing separation-of-powers challenges to removal re-
strictions on the merits.
https://www.supremecourt.gov/docket/docketfiles/html/public/22-714.html
Tell me how they will end up ruling and I can answer that question.
That's the problem with litigation, there's so many possible outcomes, that's why reasonable parties settle their disputes between themselves.
Here, the federal government has zero time limits/deadlines, is use to getting coequal (or more) deference by the federal courts, AND HAS VIRTUALLY ALL THEIR LITIGATION EXPENSES PAID FOR BY THE PLAINTIFF SHAREHOLDERS.
Why would the government possibly want to work out their differences with the Plaintiff Shareholders? Because it's the right thing to do?
The MQD is simply a Seperation of Powers issue. If you believe that the August 17, 2012 federal agency action Nationalized the GSES and that Nationalizing the 2 lynchpins of the US Secondary Mortgage Market is a Major Question of Economic and Political Importance exclusively reserved for the US Congress, then the MQD could end up helping the shareholders (and ironically the federal government) get the GSES out of the 14+ year temporary CONservatorships.
Nice insight and I think you are zeroing in on the 3 prerequisites to unlocking the gates at the federal courthouse to get a MQD constitutional challenge to the NWS. Notice what the Gorsuch Concurring opinion says about the 3 prerequisites, "Gorsuch wrote that “this list of triggers may not be exclusive”.
What's interesting is that next Tuesday, February 28th, the oral arguments for another MQD case, the student loan forgiveness case is being argued. If you read the government's brief, they are arguing that the MQD does NOT apply because ALL 3 FACTORS are not present and therefore no MQD.
The US government maintains that the MQD requires ALL 3 FACTORS to be present.
The US Chamber of Commerce in their Amicus Brief are asking the SCOTUS to provide clarity.
Will they? Stay tuned for another drama filled episode of "When EXACTLY does the MQD apply to any given fact pattern!". !
Looks like the next Order Issuance Date is Monday, March 6th:
https://www.supremecourt.gov/
That's a good question. On the one hand why grant Cert if you aren't seriously considering changing the opinion? On the other hand hearing the cert and writing an opinion about it would be the new precedent in every federal and state courthouse. I'm totally guessing that they will grant it since the federal government asked them and doesn't like the uncertainty associated with the ruling and CFPB's agency actions going forward.
By denying cert, the CFPB opinion would only be precedent in the 5th Circuit (Texas, La, Miss) and that may or may not help us in Collins, depending on whether or not the HERA is similar enough (which they both have double appropriations bypass procedures). It would also give the US Congress time to write legislation fixing the constitutional problem.
But here's the twist with denying the cert, another of the other 12 federal circuits could rule differently than the 5th Circuit, creating a split amongst the Circuits and then that case is appealed and eventually the 5th Circuit case could be reversed in that situation.
So it's good to keep our eye on it, but nothing's ultimately settled nationally unless the SCOTUS decides it.
I sort of understand what you are saying. Are you saying that you want posters presenting novel legal challenges to the NWS and/or other FHFA actions to provide a link to their sources?
Of course we are all on the same team and both common and jps have suffered way too long (and in my opinion unnecessarily) and the status quo is not acceptable to any of us.
I'm thankful that you took your time and posted that link for us and hope you spend more time contributing!
It's quite remarkable to think that the CFPB and FHFA have been avoiding Congressional Appropriations Oversight Review since their inception.
We may find out tomorrow morning if the SCOTUS will review the issue or let the 5th Circuit decision stand.
Thanks once again for pointing me in the right direction! I never realized Administrative Law could be so intriguing a subject matter and its rise to power and dominance over Americans lives and their businesses since President Woodrow Wilson and James M Landis advocated and aggressively sought expansively growing the Administrative State.
This is from the Amicus Brief of the US Chamber of Commerce in the student loan forgiveness case to be heard February 28th at the SCOTUS.
AS the MQD is in play in one of the cases, the US Chamber of Commerce is asking the court to rule that the MQD (like Justice Gorsuch's Concurring opinion stated in WV v EPA- per the link you provided) does NOT require all three situations for the MQD to apply but only 1 condition:
Here's the link to the Amicus Brief and the relevant quote:
https://www.chamberlitigation.com/cases/biden-v-nebraska-department-education-v-brown
"The Department’s arguments rest on a flawed
premise—i.e., that agency action must bear all the
hallmarks of a major questions case described in West
Virginia for the doctrine to apply. This Court
announced no such requirement in West Virginia, and
the doctrine’s basis in the separation of powers
militates in favor of a much broader application. For
the reasons set forth below, the Court should reject
the Department’s narrow conception of the doctrine
and hold that a clear statement of congressional
authorization is required whenever it appears that an
agency is wielding legislative authority to set policy that Congress would normally be expected to
establish.
3"
Here's Footnote 3:
"3 In the seven months since West Virginia, lower courts have
struggled to determine when the major questions doctrine
applies. See, e.g,, Kaweah Delta Med. Health Care Dist. v.
Becerra, No. CV 20-6564-CBM-SP(x), 2022 WL 18278175, at *1,
*7–8 (C.D. Cal. Dec. 22, 2022) (applying the doctrine to HHS rule
decreasing Medicare payments to hospitals overall in order to
fund increased payments to the lowest quartile of hospitals);
Louisiana v. Becerra, No. 3:21-CV-04370, 2022 WL 4370448, at
*2, *10–11 (W.D. La. Sept. 21, 2022) (applying doctrine to HHS
rule imposing vaccine and masking mandates at Head Start
school programs); Arizona v. Walsh, No. CV-22-00213-PHX-JJT,
2023 WL 120966, at *1, *7 (D. Ariz. Jan. 6, 2023) (declining to
apply the doctrine to DOL rule increasing minimum wage for
federal contractors to $15 per hour); Loper Bright Enters., Inc. v.
Raimondo, 45 F.4th 359, 364–65 (D.C. Cir. 2022) (declining to
apply doctrine to rule adopted by National Marine Fisheries
Service requiring the fishing industry to fund at-sea monitoring
programs). Judges have also disagreed as to whether the
doctrine applies to actions of the President as well as to those of
the agencies. See Georgia v. President of the United States, 46
F.4th 1283, 1313–14 (11th Cir. 2022) (Anderson, J., concurring
in part and dissenting in part); Louisiana v. Biden, 55 F.4th
1017, 1038–39 (5th Cir. 2022) (Graves Jr., J., dissenting)."
The 4th branch of Gubmint can get done what the POTUS can't get through the US Congress, it's much easier to utilize his Administrative State to do it, and with the Chevron Defence rubber stamping and approving it all at the federal courthouse.
Welcome to the New Amerika, Comrade !
Speaking of Comrades, Senator Wyden, is advocating a federal agency to simply ignore a federal court ruling in an upcoming case, from todays WSJ:
"The idea that politicians can ignore a court order they oppose isn't new, but it is radical. Yet last week Democratic Sen. Ron Wyden, who runs the Finance Committee, called on the Biden Administration to ignore a legal ruling even before it is made.
"In the coming days a lawless Trump-appointed judge is expected to ban access to abortion medication nationwide," Mr. Wyden wrote on Twitter after making the same point on the Senate floor. "I'm calling on the FDA to protect the safety of every woman in America by keeping the drug on the market no matter the ruling."
Don't you think it is a good idea to at least explore legal challenges in the event that the current round of litigation ends up with goose eggs for the beleaguered shareholders?
Seems worthy of discussion at least, as 1 or more of the 8,000 shareholders in Fannie Mae could challenge the federal agency action that has Nationalized the GSES, the NWS.
"In invoking the major questions doctrine “label,” the Court cited “an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”
You understand that a federal agency action can be statutorily permissible (as the NWS was in Collins) but be invalidated by the courts if it violates the MQD and is held to be unconstitutional, right?
Nationalizing the 2 lynchpins of the US Secondary Mortgage Market may not have been what the US Congress intended nor would have expected as that would be a Major Question of Economic and Political Importance that is reserved EXCLUSIVELY for our ELECTED REPRESENTATIVES in Congress and NOT by 1 Unelected Bureaucrat at the FHFA (here DeMarco).
"In Brown & Williamson, the Court held that the FDA’s statutory authority to regulate “drugs” and “devices” did not authorize the agency to regulate tobacco products. In rejecting the FDA’s interpretation of the statute, the Court held that “Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.”11 The Court explained that “[d]eference under Chevron to an agency’s construction of a statute that it administers is premised on the theory that a statute's ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps. . . . In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
"In Gonzales, the Court held...“The idea that Congress gave [the Attorney General] such broad and unusual authority through an implicit delegation in the CSA's registration provision is not sustainable. . . ."
"In Utility Air, the Court said, ... "When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,’ . . . we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’”
"In Alabama Association of Realtors, ... The Court stated that the expectation for Congress “to speak clearly when authorizing an agency to exercise powers of “vast ‘economic and political significance’” applied to the case, since “[a]t least 80% of the country, including between 6 and 17 million tenants at risk of eviction, falls within the moratorium.”"
"In NFIB v. OSHA, ... The Court held that “[p]ermitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA's regulatory authority without clear congressional authorization.”
"The Court in West Virginia v. EPA...stated that “given the various circumstances, ‘common sense as to the manner in which Congress [would have been] likely to delegate’ such power to the agency at issue . . . made it very unlikely that Congress had actually done so.”
If you get a chance to read WV v EPA, decided last Summer by the SCOTUS, you will see that Justice Gorsuch laid out the NONEXCLUSIVE factors needed to trigger a MQD challenge to federal agency action.
Ask yourself, are ANY of these factors present when DeMarco implemented the August 17, 2012, NWS and Nationalized the 2 lynchpins of the US Secondary Mortgage Market?
"Gorsuch then identified the following triggers, based on the Court’s precedents, for determining that “an agency action involves a major question for which clear congressional authorization is required:
First, if the agency is claiming power to resolve a matter of “great ‘political significance’” or if the agency is seeking to end an “earnest and profound debate across the country.” Instructive for these questions are whether Congress has considered and rejected taking similar action to that of the agency’s proposed action through legislation in the past.
Second, if the agency seeks to regulate “a significant portion of the American economy” or “require ‘billions of dollars in spending’ by private persons or entities.”
Third, if the agency seeks to intrude in an area that is the particular province of state law.
Gorsuch wrote that “this list of triggers may not be exclusive” but “each of the signs the Court has found significant in the past is present” in West Virginia v. EPA, making it “a relatively easy case for the doctrine’s application.”
If invalidation of the NWS is a worthy goal, then challenging the NWS in the federal courts is worth considering by 1 or more of the 8,000 Fannie Mae shareholders or any of the Freddie Mac shareholders.
When does the MQD apply to invalidate federal government agency overreach? According to the Amicus Brief filed by the US Chamber of Commerce in the student loan forgiveness case, 6 federal cases have decided MQD cases, and the Chamber is requesting the SCOTUS to provide more bright lines:
"In the seven months since West Virginia, lower courts have
struggled to determine when the major questions doctrine
applies. See, e.g,, Kaweah Delta Med. Health Care Dist. v.
Becerra, No. CV 20-6564-CBM-SP(x), 2022 WL 18278175, at *1,
*7–8 (C.D. Cal. Dec. 22, 2022) (applying the doctrine to HHS rule
decreasing Medicare payments to hospitals overall in order to
fund increased payments to the lowest quartile of hospitals);
Louisiana v. Becerra, No. 3:21-CV-04370, 2022 WL 4370448, at
*2, *10–11 (W.D. La. Sept. 21, 2022) (applying doctrine to HHS
rule imposing vaccine and masking mandates at Head Start
school programs); Arizona v. Walsh, No. CV-22-00213-PHX-JJT,
2023 WL 120966, at *1, *7 (D. Ariz. Jan. 6, 2023) (declining to
apply the doctrine to DOL rule increasing minimum wage for
federal contractors to $15 per hour); Loper Bright Enters., Inc. v.
Raimondo, 45 F.4th 359, 364–65 (D.C. Cir. 2022) (declining to
apply doctrine to rule adopted by National Marine Fisheries
Service requiring the fishing industry to fund at-sea monitoring
programs). Judges have also disagreed as to whether the
doctrine applies to actions of the President as well as to those of
the agencies. See Georgia v. President of the United States, 46
F.4th 1283, 1313–14 (11th Cir. 2022) (Anderson, J., concurring
in part and dissenting in part); Louisiana v. Biden, 55 F.4th
1017, 1038–39 (5th Cir. 2022) (Graves Jr., J., dissenting)."
The US Chamber of Commerce is asking the SCOTUS for a clearer bright line rule:
"...the Court should reject
the Department’s narrow conception of the doctrine
and hold that a clear statement of congressional
authorization is required whenever it appears that an
agency is wielding legislative authority to set policy."