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“Is 5th Circuit Appealate Panel Decision in CFPB really of national importance, wouldn't it largely be confined to the 5th Circuit (Mississippi, Louisiana, and Texas) and not be precedential in the other Circuits?”
It is ONLY binding on federal courts in the Fifth Circuit, so yes, only those 3 states.
“Could the SCOTUS take the Petition, hear it in the Fall, and decide next Spring or Summer to limit the remedy in a way that would avoid invalidating all the CFPB'S federal agency actions for the last 12 years?”
If SCOTUS hears questions and decides on the merits, and affirms the Fifth Circuit, I honestly cannot think of a way to avoid the eventual invalidation fall out. To avoid the fall out, the remedy would need to be watered down: I just can’t see how. But here again, SCOTUS might instead decide to simply not hear the CFSA case.
“I thought Collins is where we got the split jury decision and will move to round two of trial?”
No the split-jury occurred in a case with consolidated plaintiffs where the only remaining claim is breach of the implied covenant of good faith —a contract claim. A second trial will occur in that case soon.
Collins v Yellen is the case the plaintiffs got 2 claims to SCOTUS, but was remanded back to district court to determine on the Removal Clause claim if Ps suffered “compensable harm”. The district court summarily dismissed this claim on a procedural basis, opining that proving such harm was a futile effort.
Collins Ps have now appealed again to the Fifth Circuit. And in the wake of the Fifth Circuit’s panel opinion in CFSA V CFPB, Ps have mirrored the CFSA constitutional claim by arguing a new claim: FHFA’s self-funding structure as an independent agency violates the Appropriations Clause.
I empathize with feelings, but your conclusion (“It’s over”) is a fallacy of over-generalization.
That favorable judgment has arisen in no final case does not logically preclude it from happening in all non-final cases. This would only be true if all cases and claims were identical. Hence the fallacy.
The Wazee plaintiffs’ attorneys are listed as Hamish Hume, Sam Kaplan, Eric Zager
https://www.glenbradford.com/wp-content/uploads/2023/02/18-1124-0021.pdf
https://www.sec.gov/Archives/edgar/data/310522/000031052220000121/descriptionofsecuritie.htm
This is FNMA’s SEC ‘section 12’ registered securities summary from 12/31/2019.
Page 5 states “Preferred Stock is not subject to mandatory redemption…” thus it appears no non-perpetuals (e.g., a 25 year mandatory redemption) still haunt the landscape.
Robert what case did you get this from?
“Don't you think if any of the remaining Shareholders are going to litigate under a new Nondelegation Doctrine constitutional challenge that the BEST federal Circuits would be the 5th or 8th and not the 9th? “
That sounds correct from a head-count standard for that constitutional claim.
“In addition to the PLF and NACL, I discovered the Consumer Research is challenging federal agency overreach under the Nondelegation Doctrine, have you heard of them before?”
No they are new to me. Thanks for the info. I am a lifelong member of Consumer Reports, and C Research started out there. Good stuff!
“ALL the current AND former FHFA Directors have said, "the US Congress should decide on the future of the GSES".
My understanding is that this is true of the Democrats, but not of the Republicans or Libertarians. Correct me with a quote if I am wrong.
“You and i can do non presidential letter writing”
This is great. I vote it best quip of the day.
Procedurally, in order to amend an existing legislative rule, an agency generally must comply with the same notice-and-comment rulemaking procedures, outlined in § 553 of the APA, that governed the original promulgation of the rule.
The agency cannot informally adopt a policy that contradicts terms of a formally adopted rule. See NFPRHA v Sullivan, 979
F.2d 227 (DC Cir. 1992)
It’s thus possible … but … bounded by the same red-tape rule-making process of the initial rule.
Seconded
The discussion there did not engage a structural funding theory. Congressional feedback was not a question relevant to that discussion. Nor does the label “Liliputian” replace the statutory duty to report material defects. The Fifth Circuit may prove me wrong, and GLTA, I just think their new assignment is not as easy as some old work might make it appear.
True that FHFA and CFPB have an at-will Director terminable only by POTUS, and both have non-appropriated funding.
But whereas CFPB has no oversight board, FHFA *does have* a 4-member oversight board with broad power, that must convene quarterly, and must “testify” annually to Congress, whom can then give feedback. This is the Federal Housing Finance Oversight Board (“FHFOB”).
This distinction is not a clear cut game-changer, but if I am the USA I appeal to Chief Roberts’ idea positive structural checks (see Bowsher v Synar, and Seila v CFPB): FHFOB is a legislated check on material operational misfeasance. And issues of funding are clearly operational issues. So despite the curiosity of one Agency (FHFA) collecting all revenue from a few very large regulated GSEs, Congress did not fully divest itself of its funding power because the FHFOB is its effectively its eyes and ears.
See Section 1103 in:
https://www.govinfo.gov/content/pkg/PLAW-110publ289/pdf/PLAW-110publ289.pdf
Robert IMO the Agency action will not be invalidated. But in recap, JPS > common.
Agree the commons will be beaten, and beaten they will be.
JPS have a single contractual protection - yes - but that is not the same as having immunity from sovereign interference.
Gorsuch IMHO is correct on the controlling principles in Austin v. United States, 509 U. S. 602. And IMO a majority is very much ready to tackle the 8th Amendment Excessive Fine clause issue for civil fines, but they are waiting for the right case. Hennepin County is the better case.
The majority here (actually at least 6) said NO for politics of perception: high wealth and a foreign bank account canceling out the woman’s age.
The Court is generally dissatisfied where the boundaries of the Fifth & 8th meet, and in “Horne II” they expanded personal property Takings lines — virtually assuring a future viable 8th Am case when it involves no guard rails on the relation of the amount taken to the actual crime or simple violation. Without proportionality it violates the Fifth Am standards in 2 cases: Nolan & Dolan.
“…I think it wouldn't even be as difficult as you say. FHFA, and by extension the boards (while FnF are in conservatorship) has no fiduciary duty to shareholders.”
Agreed.
“The protection against something like this is supposed to be the 2/3 clause in the juniors' contracts, which say that any change to the contract which "materially and adversely affect the interest of the holders of the Preferred Stock" must be approved by 2/3 of the holders. Are you suggesting that this clause can be legally circumvented by the doctrine of efficient breach?”
Yes IMO the doctrine supplies a principle for FHFA to use to deploy a circumvention.
I’d guess oral arguments early this Fall, decision Spring 2024
“My main questions are: can the juniors' contracts be bypassed if FnF continue in their current corporate forms (i.e. no newcos)?”
Kthomp have you considered the doctrine of efficient breach? Just curious. In principle this can give a Board the leverage necessary to force a change in the par value. The action does not run afoul of the fiduciary duty of good faith & loyalty provided it is made in good faith and supported by economics.
So I don’t know that JPS could be bypassed entirely. I think to do that under this doctrine, the Board would need to show convincing justification in economic terms.
To determine which judges are assigned to Collins’ current appeal, you need to use PACER. There are small search fees.
In CFPB v CFSA the 3-judge panel was Willett, Engelhardt and Wilson. Judge Cory T. Wilson wrote the opinion.
In Collins v Mnuchin (the Fifth Circuit’s fractured decision filed 9/6/19) Willett authored the 9-7 opinion for the majority, in which Engelhardt joined. Wilson was not on the 16-judge panel.
Interesting. I had not seen this. I think this would be a great oral argument to hear.
To me the 8th amendment Excessive Fines question is the more interesting problem.
It’s heard far less frequently than 5th Am
claims, and civil forfeitures under the clause are more of a gray area than criminal forfeitures. Also obviously the local statute which authorizes this kind of excessive inequity needs some guard rails
or it eviscerates both amendment rights. We shall see.
The Amicus brief quote you provided about Unjust enrichment is a plausible theory; most states require all other issues to be exhausted before the court will address it (it’s an implied contract claim). This is why the Amicus discusses it as a theory of last resort.
I agree that’s a critical section. The pivotal wording here is:
“Upon so deciding, Saratoga understood, with what may only be viewed as a historically rooted expectation, that the federal government would take possession of its premises and holdings as conservator or receiver if …”
(1) “premises” plus, “and holdings”. So, both tangible and intangible.
(2) Replace “Saratoga” with shareholders and that’s exactly what the CAFC said on 2/22/22.
Agree that in shareholders’ case it’s a classic tragedy (with IMO a complicit actor), and now with the referee denying review on a call in the CAFC’s home court, that is pretty much a buzzer sounding. Booo.
Robert I read the brief briefly including pages 46-7.
The plaintiffs rely on the major questions doctrine. That’s indeed what the district court found.
The defense says, no, just because there is an important economic political question does not mean the case must necessarily be decided on that basis.
The defense uses Collins and the others as examples of instances of obvious economic importance where nevertheless SCOTUS —instead of raising the MQD—relied purely on old-school textual analysis.
In this short defense summary point, IMO the defense is absolute correct. But in Collins no lower court raised the major question doctrine, so the defense’s counter has less teeth than a flat reversal. I don’t think any of the footnoted cases are MQD reversals, they are just cases where SCOTUS decided for whatever reason to not go there.
The defense is further correct in that in Collins’ APA claim, Alito ignores the possibility separation of powers concerns: he evaluated the APA claim by a text-book old school (“old” at least, meaning pre-Chevron) statutory analysis. I have said it before. That’s why the vote was 9-0: it was non-Chevron and purely a textual decision.
A notable distinction between Biden & Collins is that in standard S.O.powers jurisprudence, courts will tend to grant an executive order by POTUS more leeway than a regulation issued by the 4th branch.
Robert, to your points in Fairholme.
1 “Basically financial institutions regulated by the federal government can't exclude the federal government from coming on their property and inspecting their books, therefore no right of exclusive use of their property therefore no taking”
You missed the power to affect ownership.
You can reason that physical entry as Agency power is insufficient because its sole effect would be analogous to an easement on the real property (title). There would be no effect on intangible property.
“but that's about physical real property not the economic rights property inherent in shares of stock, right?”
It’s about both. This is the key. The Agency has a statutory right to entry *and* power to declare Conservatorships (etc.).
2. “…Isn’t that a taking?”
The CAFC panel did a poor job explaining its answer.
The answer is ‘no’ the NWS cannot constitute a physical fifth amendment taking. The reason is based on the physical takings doctrine: shareholders could not have developed “a historically rooted expectation of compensation for such an action” (*) from HERA.
*This principle comes from Loretto Teleprompter, which is still the bedrock case for physical “per se” takings. And it was shareholders the who positioned their claim as a per se (not regulatory) taking.
I suggest digging deeper and reading the leading case (from the CAFC in 1992) that the CAFC panel cited, because IMHO this 1992 case contains a longer & more nuanced explanation:
California Hous. Sec., Inc. v. United States, 959. F.2d 955 (Fed. Cir.), cert. denied, 506 U.S. 916. (1992) .
https://cite.case.law/f2d/959/955/3384520/
Question “: If the current round of litigation to reverse the NWS is not fruitful, would litigation using the Major Questions Doctrine to invalidate the NWS have any legs?”
Short answer: IMO very hard, but possible
The MQ doctrine has 2 steps. Both steps present difficult challenges.
In step 1, the NWS by itself IMO just seems unlikely to meet the list for a question of major economic-political importance. I will leave it at that, for now.
Say Step 1 is met, then in step 2 we have another problem: FHFA can argue Alito’s HERA analysis in the Collins APA claim constitutes “clear Congressional authority”. And that is a strong argument because it cites a 9-0 SCOTUS opinion.
But here, the shareholders could at least muster a plausible counter-argument: an implied expression of power is no longer sufficient for a question of major economic & political importance. In truth, SCOTUS in WVA v EPA didn’t say one way or another on that. It might be that no contextual or ‘implicit grants’ constitute “clear” Congressional authorization, or it might be that some are permissible but only in very limited instances (whose contours will develop as case law grows). My adjoining argument would still be, ‘whatever those limited instances are, they should not include a statutory reading like this one.’ The devil would then be in the details.
“?
why is a law by congress ---- less an administrative state - in most cases ?
(yes a law can be written to NOT .... but when active or proactive or .... how is a law (that is then administered by executive as our government is designed) not administrative ? )”
Under the Administrative Procedures Act of 1946, an "agency" is any federal governmental authority other than Congress, the courts, and the military. The term "agency" is often used to refer to federal departments, sub-departments, and commissions.
Also under the same Act, all Agencies fall under the Executive branch, and all Agency actions are funneled into one of two types: adjudication or rule-making. There is no third action category. Adjudication (formal and informal) judges specific rights. Rulemaking is everything else.
I am not averse to a discussion of alternatives to federal judge life tenures.
There may be some merit to that.
But whether tenure is life or something less, the fact remains that under Administrative precedent (Chevron) *Justices and all federal judges* MUST defer to Agency interpretations of ambiguous statutes or rules.
Chevron was wrong when SCOTUS decided it and it is wrong today. It violates a judge’s oath, it lets Congress avoid hard decisions, and lets those hard decisions be made *unquestionably* by unelected appointees.
This is a good law review introduction to the modern triple threat of delegation, deference and (unaccountable) agency independence.
He accurately predicted that the major questions doctrine would take a bite out of Chevron - which just happened in WV v EPA this year.
IMO he misses the mark on Humphrey’s Executor —but that’s the only negative remark I had.
Overall just an excellent indictment of the 4th branch.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3332672
“Does CFPB’s unique funding structure apply to FHFA as well?”
IMO this is absolutely a sea-change issue for shareholders but, for now, there just is no conclusive yes or no answer.
The post-Seila Law blog linked below is by the two NCLA authors I mentioned before. They compare CFPB to FHFA & FDIC in latter sections. I found it informative.
https://lawreviewblog.uchicago.edu/2020/08/27/seila-chenoweth-degrandis/
IMO the NCLA tracks all agency overreach and separation of powers, generally.
But clearly separation of powers issues are featured ‘front-and-center’.
IMHO this attention just reflects reality: these areas of law are subject to a growing chorus of criticism by claimants, federal jurists, and (excitingly) even state legislatures and courts. For example, the Wisconsin Supreme Court overruled the Chevron doctrine in 2018. The state of Florida abandoned Chevron legislatively.
Agree on Thompson, he did propose that.
FWIW, two of the lawyers who led the Amicus brief in Seila v CFPB were Markham S. Chenowith and
Michael P. DeGrandis
The blog I like by these 2 guys should still be available at this link.
https://lawreviewblog.uchicago.edu/2020/08/27/Seila
Here are 4 remedy options we might see from SCOTUS if it hears CFPB v CFSA.
I gleaned #3 and #4 in large part from a blog by New Civil Liberties Alliance, who also filed an Amicus brief in Seila.
(1) Bulldozer: strike down Dodd Frank Title X in its entirety. IMHO: I doubt the Court is willing to take that bold a step.
(2) Sharp Chisel: strike the parts needed to sever the funding stream from the Federal Reserve. IMHO: the problem is it’s a fair amount of provisions to ‘blue-pencil’, and, (BTW) it would *disable the CFPB*. Nor can the Court alternatively somehow *order Congress* to fund CFPB from another source.
(3) Dull Chisel: Strike the offending self-funding parts as unconstitutional BUT stay the mandate to give Congress time to address the issue. IMHO: this balances the means and the ends, itis less partisan, and the Chief can couch it as respecting bicameralism and presentment. I like it.
(4) Sledge Hammer: Along lines of the concurrence musings in Seila by Thomas and Gorsuch, SCOTUS could simply refuse to enforce the CFSA order. This signals that as long as the CFPB’s unconstitutional funding structure remains as-is, CFPB can expect to find all similar challenged orders unenforceable. IMHO: this is a low-risk, low-reward option that favors old school orthodox legislative reform in due (sloooooow) course.
GLTA
Yes it’s helpful that the requests for review are from both red and blue states. I don’t think there is much doubt SCOTUS must hear CFPB v CFSA.
If SCOTUS declines, then IMHO:
(1) CFPB could still ask for a Fifth Circuit all-hands appeal ( ‘en banc’). But that will be a losing effort and CFPB obviously knows it: I see only 7 of 19 CFPB-friendly judges (probably the main reason for the unusual leap from ‘panel’ straight to a USSC Writ of Cert).
(2) Every CFPB action in TX, Mississippi and Louisiana becomes subject to individual case challenges with merit. Death by a thousand cuts would commence, so CFPB instead might need to consider at least “staying” all its actions for an indeterminate time in those 3 states. And good riddance to bad rubbish.
I don’t think Seila or Collins had enough tools to deploy a bulldozer, per se. But the looming issue of FHFA self-funding outside of Appropriations will likely merit further and closer appellate review if the Court agrees to hear CFPB v CFSA (which I think is about 80% likely).
That said, *a better scalpel* in Collins could have (and should have) been wielded by SCOTUS. IMO, Gorsuch still has the best idea for Removal remedy because it uses the same rule as in Appointments cases. I don’t see a meaningful reason to differentiate the two types of cases. Alito’s rule, albeit novel, is a wrong turn onto Subjective Street.
“Combined with the Court’s holding that every FHFA director had full authority to carry out the functions of his office, it is hard to imagine how the removal restriction that never had legal effect could have caused any legally cognizable harm, as any harm would have been due to the President’s own mistake of
law and not to any unlawful action by a director.2"
A lot to unpack here. Bear with me. TIA.
First, Schlitz’s conclusion is applied to Seila Law v CFPB, it contradicts the remedy adopted by Chief Roberts’ (supported by a 7-2 count!). Instead, Schlitz would propose that the for-cause CFPB Director (who was not fired) should not have had his demand-for-documents nullified.
This is flat WRONG. The Seila court order enforcing the CFPB demand-for-documents *was rejected* by the Chief. Why else on remand was the lower court ordered to see if a later Director cured the CFPB doc demand (by ratifying it)? Schlitz ignores this rather obvious jurisprudential problem.
Second, in Bhatti v FHFA (which is obliged to follow Collins v Mnuchin) Schlitz now says POTUS is necessarily a victim of his “own mistake”. What mistake? In what sense? Schlitz never really says. And why is this the superseding kill-switch (sufficient)? Schlitz spends only a broadly worded, single sentence saying why. That’s not an explanation.
Finally, if we accept that harm can only occur if POTUS acts against a statute, then POTUS will be forced into more litigation. This high-minded framework is simply doomed to fail on more realistic levels:
(1) Congress will be motivated to create more and more statutory ambiguity to put POTUS in a permanent state of hunched shoulders; forced to act, POTUS will **over-act** on these ever increasing power issues, causing needless litigation and costing Treasury and tax payers, while enriching only the usual law firms (who can now go on the offensive).
(2) Most importantly, this proposed gloss on remedy opens one more stall door into the herd mentality of courts being required to defer to Agencies (Chevron deference). This ultimately thus cedes even more power to Agencies and Congress from POTUS, who is the only branch leader singly accountable directly to citizen voters.
So instead of offering a better balance mechanism, this fiasco just quietly presses the same old thumbs on the same old scale.
“4617(a)(7)…”
The Anti-Injunction clause (“AIC”) does not bar constitutionally-based claims.
No case has held that it does so.
The AIC does bar non-constitutional claims, as long as the Agency exercises (rather than exceeds) its statutory power.
If you are asking why Congress can limit courts in the latter situation, the answer I can best give is that history and precedent support it, particularly since the Chevron case in 1984. But it is not without criticism.
It’s a situational power-chisel. Most of all it illuminates just how deeply embedded judicial deference to Agencies has become in different ways, affecting everyday life. And…It gets worse. POTUS has tested the limits of this thru Executive Orders. In the end, SCOTUS reveals its jurisprudential tendency (of the day) by deciding to *not hear* certain challenges or to relegate them to the shadow docket. It’s a fairly-hot hot-mess.
“Congress wrote the funding method for both the consumer B and FHFA
why can a court (question)?”
First, our Constitution itself sets up a a hierarchy of laws. If any lesser law conflicts with the Constitution, then the Constitution automatically trumps the lesser law.
Second, per Marbury v Madison, the power to say what a law ultimately means — especially its constitutional dimensions — belongs emphatically and finally in the Supreme Court.
“So FHFA will become constitutional?”
No. Based on Senator Toomey’s remarks, he introduced Senate Bill 5280 on 12/15 for only the CFPB. The bill is not yet available for reading, so if you want you can track its status here:
https://www.congress.gov/bill/117th-congress/senate-bill/5280
IMO SCOTUS will hear this case.
The result in Seila has basically taken the CFPB out of the separation of powers (for-cause single Director) frying pan, and INTO the Non-Delegation Fire.
Here is my thought process in Seila Law and Dodd-Frank. Having the president direct up to 12 percent of Federal Reserve funds, as Title X of Dodd-Frank now does, causes the same kind of constitutional harm as a limit of 50% or 100%. By passing a law leaving it up to federal agencies how much money to spend, Congress unlawfully divests its core legislative appropriations power. After Seila, POTUS could also unilaterally instead spend $1.00
and use the broad delegation of power to defund CFPB. So after Seila, Dodd-Frank delegates to POTUS all the power of the purse. That cannot be correct.
Robert,
Numbers are not my strong suit. That said, per FHFA website, the US Treasury’s commitment to each enterprise was last tweaked in the 2nd Amendment to the SPSPAs way back in 2009 (see link below for Fannie’s).
The doc says Treasury max commitment is the *greater of* $200 Billion, OR, that amount plus any deficiencies (and minus any surpluses) from 2010-2012.
So IMO the UST commitment to each enterprise is a known, hard-and-fast figure (certainly NOT unlimited) no less than $200B.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Second-Amend-to-the-Amended-and-Restated-SPSPA_12-24-2009.pdf