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(I added bold): "More fundamentally, though, the district court’s analogy to contemporaneous
agency explanations makes no sense. Administrative agencies are required to
provide contemporaneous reasoned explanations for things they actually do. Here,
President Trump is explaining what he would have done in a counterfactual situation
made relevant for the first time by a Supreme Court decision that issued after he left
office. Under the district court’s reasoning, a sitting President would have to make
a public, contemporaneous statement for every action he would like to take but
cannot take because of some limitation on his authority. And here, President Trump
would have had to do so with no prior notice of that requirement. This would be an
exercise in absurdity, not a basis for denying relief for constitutional harms."
"Plaintiffs—or President Trump for that
matter—had no way of knowing that they needed to amass counterfactual evidence
before the Supreme Court established the counterfactual test."
"Second, the district court created and imposed on Plaintiffs new, heightened
evidentiary standards for stating a claim for a remedy under Collins. For example,
the district court held that Plaintiffs did not plausibly allege that the Trump
Administration had a “concrete plan” to end the conservatorships. ROA.1518–19.
But the requirement for proof of a “concrete plan” is found nowhere in the Supreme
Court’s decision in this case or in any other relevant authority. See also ROA.1519
(requiring Plaintiffs to show that the Administration had a “clear path” to its goals).
Notably, the Supreme Court’s example, which the Court said would “clearly” cause
compensable harm, consisted solely of a statement by a President. Collins, 141 S.
Ct. at 1789 (“Or suppose that the President had made a public statement expressing
displeasure with actions taken by a Director and had asserted that he would remove
the Director if the statute did not stand in the way. In [that] situation[], the statutory provision would clearly cause harm.”). The Supreme Court—unlike the district
court—did not impose an additional, heightened requirement for a “concrete plan”
or “clear path” to execute the President’s intent. ROA.1518–19."
"Third, the district court improperly based its analysis on a policy judgment
that Plaintiffs’ relief would be too sweeping or invasive to the current
Administration. "
Follow my conversations with Guido on the below post and Guido gave the link to Glen Bradfords Fannie gate site which does a great job with posting a lot of the legal documents in the cases as they are filed in the various federal Circuits.
I thought I read somewhere that the SCOTUS may consider deciding the Government's petition on the CFPB case during a conference this month.
(I added bold) "Now that the President has greater control over FHFA through the constitutional removal power recognized in Collins, the natural follow-on question is whether Congress should be
permitted to exercise its constitutional appropriation power over FHFA as well. The
Supreme Court has explained that “our constitutional system imposes upon the
Branches a degree of overlapping responsibility, a duty of interdependence as well
as independence[.]” Mistretta v. United States, 488 U.S. 361, 381 (1989). The
question of FHFA’s place in the constitutional separation of powers, including
Congress’s important appropriations powers, flows directly from the Court’s
separation of powers holding in Collins. See CFSA, 51 F.4th at 640 (explaining that “the Director’s newfound presidential subservience exacerbates the constitutional
problem arising from the Bureau’s budgetary independence” (cleaned up))."
"Here, the Supreme Court’s constitutional holding in Collins, which
recognized a major shift in the understanding of FHFA’s basic constitutional
structure, provides an intervening change in controlling law."
"In CFSA v. CFPB, this Court held that “Congress’s decision to
abdicate its appropriations power under the Constitution, i.e., to cede its power of
the purse to the [Consumer Financial Protection Bureau], violates the Constitution's
structural separation of powers.” 51 F.4th 616, 623 (5th Cir. 2022). That
Appropriations Clause holding is directly relevant to plaintiffs’ analogous
Appropriations Clause claims here, and gives this Court even further reason not to
apply the discretionary mandate rule to bar Plaintiffs’ claims."
"Plaintiffs
allege that “FHFA’s structure violates the Constitution’s separation of powers by
empowering it to act without oversight from Congress through the appropriations
process.” ROA.1177. This violation arises from FHFA’s unusual self-funding
structure. “HERA grants the Director full control over FHFA’s funding with no
oversight from Congress through the normal appropriations process.” ROA.1181.
“The Director has the power to establish and collect assessments directly from the
entities that FHFA regulates, not only for expenses but also to maintain a working
capital fund. The Director alone determines the amount of those assessments.” Id.
(internal quotation marks and citation omitted)."
"Meanwhile, “Article I of the United States Constitution grants Congress the
power over the purse,” through the appropriations power. ROA.1213 (cleaned up).
The Constitution’s grant of the appropriations power to Congress “precludes the
operation of an executive agency headed by a single person wielding significant
executive power other than through funds periodically appropriated by Congress.”
ROA.1177. And FHFA exercises extraordinary power over the American economy.
“FHFA regulates the massively important housing finance market and is funded
through assessments on the entities it regulates and that FHFA’s single director sets
with no congressional oversight.” Id."
"In light of this Court’s holding in CFSA, the only question that remains with
respect to the merits of Plaintiffs’ Appropriations Clause claim is whether FHFA can
be meaningfully distinguished from CFPB. It cannot. Both are non-independent
federal agencies headed by a single Director. Id. at 640 (explaining that “the
Director’s newfound presidential subservience exacerbates the constitutional
problem arising from the Bureau’s budgetary independence” (cleaned up)). Both
agencies do not receive appropriations, thus preventing Congress from exercising
direct control over their funding. Compare 12 U.S.C. § 4516(f)(2) (providing that
FHFA assessments are not appropriations), with 51 F.4th at 638 (discussing
analogous statutory provision as to CFPB). If anything, FHFA’s funding structure is
more constitutionally problematic than that of the CFPB. While the CFPB’s
assessments are limited to no more than 12% of the operating expenses of the
independent Federal Reserve, 51 F.4th at 624, the sole limitation on FHFA’s funding
power is the Director’s unbounded judgment of what is “reasonable.” See 12
U.S.C.A. § 4516(a). FHFA can thus collect unlimited funds from the Companies
with no oversight from Congress. All the while, FHFA exercises sweeping powers
over the Companies and the American housing market. ROA.1177. This structure
renders FHFA “no longer dependent and, as a result, no longer accountable to
Congress and, ultimately, to the people.” CFSA, 51 F.4th at 639 (internal quotation
marks omitted)."
As I recall, in 2006 or 2007, OFHEO (may have been DeMarco) advised the boards of Fannie Mae and Freddie Mac to increase capital and this encouraged them to issue close to $33B of JPS, which I believe was counted as CET1 according to the pre 2008 Financial Accounting rules (under FASB?)
I suspect they were considered CET1 under the financial accounting rules at the time because they had no maturity date and were Noncumulative.
Go to the Fannie Mae investor page and see if you can pull up a Prospectus there and it should say in there.
I think if we had gotten the Takings Clause litigation going, the FHFA and UST would have been on notice to have at least a contingency plan for release in place but now they don't have any motivation to work on it and almost all the other stakeholders in the GSES aren't bothered by the status quo.
When he was 1st elected in 2016, SM seemed ready to "get them out of government control".
By late 2019, SM testified in a Congressional committee, "We need to protect the governments investment".
Now we've got Sandra saying, "It's up to the Congress to decide the future of the GSES".
How LLPA's can change the average GF received by the GSES depending on a loans prepayment speed, from TH yesterday:
"Both Fannie and Freddie price most of their credit guarantees through a combination of basis points paid over the life of the loan and a lump-sum payment up front called a “Loan Level Price Adjustment,” or LLPA. In their financial reports, the companies convert up-front LLPAs into basis points by assuming an average life for the loans they’re attached to, which means that the 63.3 basis point average guaranty fee rate cited in the first paragraph is really just an estimate. If the loans associated with the LLPAs in question prepay more rapidly than expected, the realized guaranty fee on those loans will be higher, since the LLPA received will be “earned” over a shorter period of time. The opposite will be true if loans prepay more slowly than expected–the effective guaranty fee realized will be lower, because the LLPAs will be spread out longer."
---------------
https://www.fanniemae.com/research-and-insights/forecast/labor-market-expectations-wage-growth-slows-interest-rate-manufacturing-housing-struggle
Great points, Guido thanks! I guess SM talked the talk shareholders wanted to hear in 2016 with Maria B. on Fox Biz in the very beginning of the DJT administration, but in the Craig Phillips interview with Tim Rood, he was under the impression that DJT wanted the "free cash sweeps" for awhile for flexibility or the wall or something.
But MC was saying from Day 1 that he couldn't sleep at night knowing they were leveraged 1,000:1 and DJT likely knew that before he nominated MC.
Not sure why SM was so resistant to ending the CONservatorships for good and switching the cash sweeps to LP sweeps.
My guess is political optics but I have no idea. I'd ask my Senator Mark Warner, but since I'm not a card carrying member of the MBA, he won't return my calls.
Skepi, you know Uncle Suggy isn't going to end the end the 14+ year CONservatorships with less than 2 years left.
No harm in exploring potential legal challenges, we all know what happened here and that there could be structural Constitutional problems with allowing the FHFA and UST so much unchecked power.
I don't know at least he had Craig Phillips or someone look into them there was the 2018 or 2019 plan.
They did turn off the cash sweeps, whats this administration's plan, "leave it to Congress" to decide?
At least they haven't turned the cash sweeps back on.
Probably 90% of the US Congress don't even understand what the GSES do. Without any leverage for shareholders to bring Uncle Suggy to do something, the status quo will likely continue for some time possibly years until the current round of litigation is finalized.
I wonder if Sandra will use the GSES capital to remodel her Executive Suite at FHFA HQ?
I don't know it's a novel situation where you have 2 government chartered, allegedly 'private corporations', that are 100% controlled by the US Government via 14+ year 'temporary' conservatorships and the US Government has transferred hundreds of billions of dollars to itself in return for NOTHING to the conservatees, starving them of a capital rebuild partly because they wanted the US Congress to 'fix the broken system', which never happened after over a decade.
The accounting on the 10k's and 10q's to account for this bizarre set of facts is also unique and could likely be manipulated yet again at our 'dear leaders' pleasure.
Wow, thanks KT for the link to HERA'S description of FHFA's powers as Regulator!
So what's the difference between core capital, Tier 1 capital, CET1 capital, and the ERCF?
Under 4502 of HERA-Definitions Section 7:
The term “core capital” means, with respect to an enterprise, the sum of the following (as determined in accordance with generally accepted accounting principles):
(A)The par or stated value of outstanding common stock.
(B)The par or stated value of outstanding perpetual, noncumulative preferred stock.
(C)Paid-in capital.
(D)Retained earnings.
The core capital of an enterprise shall not include any amounts that the enterprise could be required to pay, at the option of investors, to retire capital instruments.
HeeeeHeeee! What's the alternative? Wait for our benevolent 'dear leaders' to voluntary give up their unprecedented power as conservator and give us back our companies?
How many times are they going to say, "We're preparing them to exit the CONservatorships" before we realize that it's just more bullsh*t spewing from a politician's mouth?
Did Ed DeMarco violate the Seperation of Powers when he Nationalized the GSES on August 17, 2012 by sweeping the GSES profits into perpetuity? Todays WSJ, another Seperation of Powers violation by a federal agency, 5 former federal agency Directors believe so and filed an Amicus Brief on the Education Department student loan forgiveness to be argued at the SCOTUS later this month:
Five former education secretaries tell the Supreme Court that his debt cancellation program would fundamentally alter the separation of powers.
Editor's note: The following op-ed summarizes an amici brief filed Friday morning at the Supreme Court by five former education secretaries in the case of Biden v. Nebraska. Their signatures appear below the text.
Each of us served as U.S. secretary of education. None of us believes the secretary has the power to cancel student loans. The Supreme Court would be wise to affirm this.
This isn't merely a question of policy, though we all believe the Biden debt cancellation plan is a misguided policy that would only exacerbate the problem of ever-rising college costs and subsequent overborrowing. Instead, this is a critical question of what the executive branch has the legal authority to do.
It isn't difficult to imagine the sweeping consequences of a precedent that allows a president to spend upward of a trillion dollars with the stroke of a pen. The floodgates of executive power would be opened in such a way that they could never be closed. The framers of our Constitution wisely gave Congress the power of the purse. The Supreme Court has affirmed that power exists, in no small part, to prevent the president from spending taxpayer funds "at his pleasure."
When it comes to student loans, the Education Department's role is clear: It disperses loans as authorized by Congress, and it ensures borrowers repay those loans. This is for good reason. Loan funds aren't borrowed from some ethereal government pot; they are borrowed from a student's fellow Americans—the vast majority of whom have either repaid their loans faithfully or never took out a loan in the first place.
It's clear Congress intended student loans to be just that: loans, not grants. Every law on the books governing the program affirms that intent, from establishing different repayment options to gauging a school's eligibility to participate in the loan program by the percentage of its graduates who are repaying their loans. To wit, the Congressional Budget Office still budgets the student loan program as profitable, meaning its very design is to help offset other budget items, not to become a taxpayer expense in and of itself.
Further, Congress has had ample opportunities to authorize mass loan cancellation. Not only has it never done so, but it has also rejected every such proposal ever brought forward. This administration points to the two-decades old Heroes Act as the law that supports its proposal to cancel student loans. But if that law did what they claim, proponents in Congress wouldn't have attempted to pass two different bills authorizing mass loan cancellation during the Covid-19 national emergency declaration.
The Biden administration's loan-shifting plan also plainly conflicts with the language and the animating purposes of the Heroes Act. Several of us were directly involved in crafting that law, which Congress passed to aid Americans affected by 9/11, as well as those who put their civilian lives on hold while serving in the U.S. military. It's unfathomable to imagine that law being used today as a pretense to grant blanket loan cancellation to people with advanced degrees earning six-figure incomes.
Until last year, that was a shared sentiment. Former Speaker Nancy Pelosi was unambiguous, saying, "People think that the president of the United States has the power for debt forgiveness. He does not. . . . That has to be an act of Congress."
President Biden even publicly doubted his own authority to cancel large amounts of student loan debt, stating, "I don't think I have the authority to do it."
Nothing changed before Aug. 24, 2022, when President Biden announced his debt cancellation plan. There were no new acts of Congress, no new laws, and no new court decisions. The only thing that shifted was the political ground upon which his administration stood. That alone can't be justification for fundamentally altering the separation of powers and indebting American families even further.
For mass student loan cancellation to occur, Congress must have both authorized such an action and appropriated taxpayer funds to cover the costs. Since neither happened, the Justices' decision in this case should be pretty straightforward to render.
Signed by,
William Bennett
Lamar Alexander
Rod Paige
Margaret Spellings
Betsy DeVos
Actually no. FHFA did those things immediately after appointing itself conservator. FHFA doesn't have that kind of power over FnF when they are out of conservatorship and classified as "adequately capitalized" by HERA.
They would make even more money by converting the seniors to commons, and everything else would be exactly the same.
The Supreme Court said that the NWS was a valid act of a conservator. Given that baseline, there is no universe in which FHFA offering Treasury a senior-to-common conversion is not also a valid act of a conservator.
The National Civil Liberties Alliance may or may not have started with this Nondelegation Doctrine Seperation of Powers constitutional argument in this case:
https://nclalegal.org/moroney-cfpb/
Even if they didn't Philip Hamburger (https://www.cato.org/events/administrative-law-unlawful) and their legal teams as a nonprofit advocacy group, along with countless others have been vigorously challenging federal government overreach from the 4th branch of the federal government for quite some time.
And plenty of Americans, their businesses, and Constitutional Rights are routinely steam rolled over by the US Government through the consolidation of 3 branches of government in federal agencies.
We all know here 1st hand about federal government overreach.
The Pacific Legal Foundation is also a long time nonprofit advocacy group, focused on American property rights.
https://pacificlegal.org/daily-journal-major-questions-about-the-major-questions-doctrine-dont-miss-the-broader-legal-significance-of-the-supreme-courts-vaccine-or-test-cases/
The entire point of raising capital is to get FnF out of conservatorship. At that point the UNACCOUNTABLE AND BROAD SWEEPING POWERS would disappear because those only apply to FHFA as conservator.
FHFA won't let FnF out of conservatorship until they meet at least the base leverage capital requirement (core capital of 2.5% of adjusted total assets), and new investors won't buy shares unless FnF are released from conservatorship. The only way to reconcile those is to have them be simultaneous.
But I don't think previous government misdeeds will prevent new investors from coming in, instead it will just lower the price they will pay. If the government offers a 500% return on investment would they dig into what happened to the last guys? 700%? 1000%? Everyone has their price.
That doesn't change the fact that converting the seniors makes more sense for Treasury than cancelling them. Why would Treasury leave any more money behind than is absolutely necessary? (Which is next to nothing.)
So if the topic is Treasury maximizing its stake, the discussion starts and ends with a senior-to-common conversion.
No claim will be able to undo the dilution anyway.
Courts won't be able to take away shares that have already been issued to Treasury and sold to outside investors.
Why can't (or won't) Treasury convert the seniors to commons?
The only answer I've heard so far is "lawsuits", which I believe can only result in damages equal to (or less than) the share price before the day of conversion, and in any case can't undo the dilution once it happens.
The NWS took shareholders by surprise
After-the-fact lawsuits against a senior-to-common conversion will be even harder to win.
Well, I would imagine anyone or more people with access to $100B to $200B in capital would want to know what exactly they are getting into and the inherent risks involved in investing in a 1st Loss Position of their Capital with a statute that gives FHFA SO MUCH UNACCOUNTABLE AND BROAD SWEEPING POWERS.
The USG never was and will be about "profit maximization" and if it was it will become clear that the best profit maximizer is maintaining its credibility for fair dealing in the capital markets and adherence to the rule of law in settling disputes among shareholders in the same capital structure.
All the bankruptcy talk is moot because FnF are already there. It isn't the entry into bankruptcy that shareholders should worry about, it's the exit.
This is there must be restructuring of the capital stack for FnF to exit conservatorship before 2040, and must be one period for existing shareholders (both common and junior pref) to unlock their value at any point.
Fantastic, its actually the National Civil Liberties Alliance www.ncla.org not nacl. I believe NCLA has Philip Hamburger and retired Judge Brown and they've got a case in SCOTUS to be decided this summer on federal agency overreach.
https://nclalegal.org/cochran-v-sec/
Did you see the hit piece in the WP yesterday on Consumer Research? (Comrade, the 'expert decision makers' in the 4th Branch will solve ALL your problems, no need to get the US Congress involved to represent the uneducated through their ELECTED REPRESENTATIVES with rule making !):
Dark-money group is sharpening the GOP's attack on 'woke' Wall Street
"Bankrolled by mysterious donors, a little-known group named Consumers' Research has emerged as a key player in the conservative crusade to prevent Wall Street from factoring climate change into its investment decisions.
On Dec. 1, the group joined 13 state attorneys general in calling for a federal regulatory agency to investigate Vanguard, one of the world's three biggest financial asset managers. Consumers' Research accused Vanguard of "meddling with [the] energy industry to achieve progressive political goals at the expense of market efficiency."
Within days, Vanguard announced it was quitting a coalition called the Net Zero Asset Managers Alliance and shelved its own modest pledges to cut the amount of greenhouse gas emissions linked to companies in which it invests. Leaders of Consumers' Research were surprised - and elated.
"I knew we had found something important," said Will Hild, who became executive director of the organization in March 2020, just as the pandemic hit. "But I didn't know Vanguard would just capitulate."
Vanguard didn't put it that way. In a statement, it affirmed its commitment to "helping our investors navigate the risks that climate change can pose to their long-term returns," despite leaving the business coalition.
Even so, Hild's group and other opponents of "woke capitalism" are feeling emboldened now that Republicans control the House of Representatives. They see themselves as part of a political alliance that can scrutinize and possibly derail the environmental, social and governance - or ESG - goals of corporations and the Biden administration.
Some big Wall Street firms - most notably BlackRock, State Street, Vanguard and Fidelity Investments - have publicly embraced sustainable investing, partly because of investor demands and pressure on businesses to speed up climate measures.
But Republicans have promised to reverse what Rep. Garland "Andy" Barr (R) called a "cancer on our capital markets." In mid-December, Barr and Sen. Mike Braun (R-Ind.) introduced legislation to nullify a Labor Department regulation that allows ESG strategies to be used in retirement plans. In addition, Barr and Rep. Bill Huizenga, (R-Mich.) hope to revive legislation they introduced in December that would block the Securities and Exchange Commission from requiring publicly traded companies to disclose their climate risk.
Consumers' Research is one of several dark-money groups - nonprofits that seek to influence policy without disclosing their donors - that hope to derail the sustainable investments push. They often work in tandem with various GOP-led organizations, including the State Financial Officers Foundation, whose top donor is Consumers' Research, according to Hild.
These activists hope that House leaders will haul corporate executives before Congress to defend their ESG practices. The hearings will examine how many financial asset managers have used their large shareholdings to pressure other companies to curtail greenhouse gas emissions, improve sustainability or bolster corporate governance.
The Center for Political Accountability's president, Bruce Freed, whose nonprofit advocates for corporate transparency, said the goal of such groups is obvious - to pressure CEOs into submission. "There's a climate of intimidation that companies are facing today," he said.
Some companies are proving to be easier to pressure than others. Vanguard, which has roughly $7 trillion under management, has long been leery of making environmental commitments. Its most recent pledge to remove carbon emissions was a fraction the size of BlackRock's. When it exited the Net Zero Asset Managers Alliance, the firm said that such agreements can be constructive but can "also result in confusion about the views of individual investment firms. That has been the case in this instance."
With a name that belies its turn to the right, Consumers' Research was founded in 1929 by Frederick J. Schlink and Arthur Kallet - co-authors of "100,000,000 Guinea Pigs," an exposé of food and drug risks at the time. The group became the nation's first independent organization to test and report on consumer products. A labor dispute led to the spinoff of what became the well-known Consumer Reports.
The original group turned to criticizing policy. In 1981, M. Stanton Evans - an editor at both the conservative National Review and Human Events - became editor of Consumers' Research, which abandoned product assessments.
Over the past three years, Consumers' Research has morphed into a self-styled watchdog of liberal causes. It has singled out ESG, which it argues harms consumers, reduces investment returns and contributes to inflation. In 2021, its budget grew tenfold to more than $8 million, according to its 990 tax form. Nearly $6 million came from DonorsTrust, a conservative billion-dollar charity, according to its 990 tax document, though Hild declined to provide details. He said the largest single donation was in "the low seven figures" and the 2022 budget would end up closer to $10 million.
While Hild depicts his group as a consumer watchdog, others see it as a right-wing front group with anonymous donors seeking to stall action on climate change.
Erich Pica, president of Friends of the Earth, said in an email that "there is a deep irony with Republicans opposing ESG while pushing companies to have unfettered free-speech" thanks to Supreme Court cases allowing unlimited campaign spending by corporations and outside groups.
Hild, however, says Consumers' Research is all about focusing on corporations, but with a different agenda than those of liberal groups. "We want to educate consumers about the issues important to their interests," he said.
In 2021, the group paid $1.6 million to the law firm Jones Day to file suit against the Consumer Products Safety Commission, arguing that its members should not be shielded from being fired by Congress or the president. The case is on appeal.
That same year, Consumers' Research took aim at the Federal Communications Commission, arguing that the FCC's Universal Service Fund - which takes money from one area of the country and provides it to underserved areas - is "an unconstitutional tax raised and spent by an unaccountable federal agency." It paid $400,000 to the law firm of GOP veteran Boyden Gray to handle the case.
A graduate of Georgetown University Law School, Hild spent a decade among Washington's conservative and libertarian organizations, including the Federalist Society, where he worked on initiatives to limit the federal government's ability to set new regulations. Leonard A. Leo, the Federalist Society's co-chairman who helped persuade President Donald Trump to embrace three conservative Supreme Court nominees, has been one of Hild's mentors. Hild called Leo "a good friend and adviser to Consumers' Research."
"Consumers' Research and its leader Will Hild are executing the most impactful pushback I know against ESG and other aspects of woke corporate culture," Leo said in an email. "It's time that businesses that are out of step with the sentiments of most Americans pay a price for their standing up for woke special interest instead of consumers."
Hild also worked at Philanthropy Roundtable, where he said he aided donors who wanted to pursue policies to "increase the percentage of children who get to benefit from growing up in a two-parent household."
Hild now runs a staff of just under a dozen people, half of them interns. They issue brief reports, links or videos on BlackRock's ESG stance, its chief executive, Larry Fink, and its ties to China. And they go after other companies, such as State Farm - which Consumers' Research said was giving inappropriate books to kindergartens about gender identity - and Levi Strauss, whose chief executive once asked customers to leave guns at home. On its website, Consumers' Research calls State Farm "a creepy neighbor" and terms Levi Strauss "woke washed." State Farm did not return calls or emails, and Levi Strauss declined to comment.
While many environmentalists say BlackRock has been a laggard in decarbonizing its portfolio, Fink has called for a shift toward clean energy. In January at the Davos, Switzerland, economic forum, Fink said he was "very optimistic on the U.S. and its decarbonization process."
To hit back against climate-minded investment companies, Consumers' Research has worked with Republican politicians in several states. Texas, Louisiana, Florida, West Virginia and Missouri, among others have moved to bar BlackRock and other firms from managing all or part of their pensions.
To recognize state politicians, Consumers' Research hosts regular events and prizes. A year ago, it gave the "Consumers' Champion Award" to West Virginia Treasurer Riley Moore for defending his state "against the progressive ESG agenda." Mark Brnovich, then Arizona's attorney general, also won a Consumers' Champion Award.
This month, 21 Republican state attorneys general sent a terse letter to two corporate proxy advisers, Institutional Shareholder Services and Glass Lewis, challenging their ESG practices.
In what could be seen as a dress rehearsal for congressional hearings, a Texas state Senate committee quizzed senior executives of BlackRock, State Street and ISS for more than six hours in mid-December.
Senators pressed Dalia Blass, BlackRock's head of external affairs, about whether the firm's membership in Climate Action 100 had created a "bias" against investing in a Permian Basin oil project vs. a solar project.
"We do not use ESG scoring for our investments," she said, adding that its one bias was "to get the best risk-adjusted returns for our clients."
Many financial analysts say eliminating analysis of climate risks would be shortsighted for elected officials and for corporations. Such restrictions would "oversimplify the issue," said Susan H. Mac Cormac, a partner and ESG expert at the law firm Morrison Foerster. She said many Wall Street strategies "are fundamentally part of risk assessment and are specifically tied to improving returns."
But Hild said his group will continue to focus on BlackRock and other companies, with an overall aim "to end the scam on consumers that is ESG."
Like BlackRock and Vanguard, "any companies engaging in the same sorts of behavior are on notice they could be our next targets," he said."
Good point, clearly a Libertarian's viewpoint of the situation is going to be different than the government can help out more people through targeted spending.
If SM and MC wanted to really "exit the CONservatorships" then why switch the NWS from cash to a dollar for dollar increase in the LP, especially after he told Maria B, "we're going to get the government out of the ownership of the GSES", in 2016?
The Federalist Society is never happy about government interference in any private markets and Fannie Mae was a FDR new deal baby with LBJ privatizing the GSES in 1968.
Jim Johnson (Walter Mondale's campaign manager) was CEO of Fannie Mae by the assistance of his predecessor David Maxwell (another Minnesotan D, I believe). Franklin D Raines (I sh*t you not, FDR!) was head of CBO for Clinton, prior to becoming CEO.
Hank ("the 1st sound they will hear is their heads hitting the floor") Paulson began the seeds of Nationalization, a Bush 2 appointment (Bush 1 & 2 always tried to attack the implicit government guarantee).
Lockhart agreed to the original SPSA originally doubling the 5% interest rate versus what the TBTF banks had to pay, although I think he was a Bush 2 appointment.
But if I had to pick my poison it would be that the R's and Libertarians are the least caustic to exiting the CONservatorships then the D's.
I remember a handful of R's quizzing SLT about the exit of CONservatorship but as I recall NO D'S!
I'd like to see the FHFA and UST follow HERA and finally exit the CONservatorships and give control back to regulated government sponsored enterprises NOT government owned enterprises.
--------
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?
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?
https://boydengrayassociates.com/boyden-gray-associates-completes-briefing-in-challenge-of-fccs-universal-service-fund/
Well, I think there has been quite a shift in thinking from destroying the GSES to keeping them as participants in the US Secondary Mortgage Markets.
BUT ALL the current AND former FHFA Directors have said, "the US Congress should decide on the future of the GSES".
Here's a crazy idea, the FHFA should preserve and conserve the assets of the GSES and exit conservatorship in the meantime.
Topics for discussion include:
(1) How to get more money from the US Government for our targeted voter base WITHOUT Congressional Appropriations Approval.
(2). Why rent control will eventually work when the US Government owns ALL the means of production in the US Economy.
SPECIAL GUEST LECTURER MELL WATT:
(3). Why ZERO CAPITAL is okay - Blurring the lines between actual Capital and a line of credit
(A) The benefits of skirt chasing in the Executive Suite to organizational Safety and Soundness
AND GLEN BRADFORD:
(4). How the Dilution solution can generate $100B for affordable housing
(A). The instant recap is a good idea - THE DECEMBER TO REMEMBER!
(B). More affordable housing money by doing a reorganization in Bankruptcy court
(C). The art of electric skateboarding in Miami Beach
(5). Why "in the best interests of the public the FHFA serves" includes the FHFA:
(A) Cross subsidizing our targeted voter base on the backs of hard working American Families who have great credit scores and higher down payments
(B). Increasing the FTE headcount yearly and handing out the high paying jobs to progressive liberals at the FHFA.
(C). Not building capital
(6). How to perpetuate the CONservatorships FOREVER:
(A). Increase the ERCF whenever they start getting close.
(B). Bring back the cash sweeps.
(C). Load up the twins with risky loans and price away the best mortgages to the TBTF banks and other financial intermediaries.
(D). Turn them into HUD 2 by refusing to pay the GSE executives competitive salaries.
(7). Why Nationalizations are the BEST PUBLIC POLICY
BK the company’s liquidate the assets for the Gov.
Then restructure with an IPO to there hedge fund buddies
Oh the drama! Will a "free market" Libertarian finally realize that There Is No Alternative to the GSE business model OR does he still believe that the "broken system needs to be fixed by Congress"?
If March 2020 wasn't a prima facia example of the importance of the GSES to the American Housing finance system and assistance to the Federal Reserve in managing the long end of the Treasury curve, what is a better replacement?
MC will simply say more competition, that the federal government should hand out implicit or explicit Gubmint guarantees to more market participants.
But what happens when strong regulators are subject to industry capture and the industry chips away at regulators abilities to be provide strong oversight OR there is a race to the bottom in both loan quality and pricing?
Yes, 2008 Financial Crisis was by design and intentional to justify placing Fannie & Freddie in a fraudulent CONceivership
That same year, Consumers' Research took aim at the Federal Communications Commission, arguing that the FCC's Universal Service Fund - which takes money from one area of the country and provides it to underserved areas - is "an unconstitutional tax raised and spent by an unaccountable federal agency." It paid $400,000 to the law firm of GOP veteran Boyden Gray to handle the case.
This group, Consumer Research IS interested in reigning in the federal agencies:
"In 2021, the group paid $1.6 million to the law firm Jones Day to file suit against the Consumer Products Safety Commission, arguing that its members should not be shielded from being fired by Congress or the president. The case is on appeal.
That same year, Consumers' Research took aim at the Federal Communications Commission, arguing that the FCC's Universal Service Fund - which takes money from one area of the country and provides it to underserved areas - is "an unconstitutional tax raised and spent by an unaccountable federal agency." It paid $400,000 to the law firm of GOP veteran Boyden Gray to handle the case."
These House and Senate members of Congress may be interested in having SLT come testify about Fannie Mae and Freddie Mac Corporate Stance on ESG issues, which I believe SLT reversed MC's prior policies on.
Send them an email, ALL THEY CAN SAY IS NO.
From todays WP: "But Republicans have promised to reverse what Rep. Garland "Andy" Barr (R) called a "cancer on our capital markets." In mid-December, Barr and Sen. Mike Braun (R-Ind.) introduced legislation to nullify a Labor Department regulation that allows ESG strategies to be used in retirement plans. In addition, Barr and Rep. Bill Huizenga, (R-Mich.) hope to revive legislation they introduced in December that would block the Securities and Exchange Commission from requiring publicly traded companies to disclose their climate risk."
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Dark-money group is sharpening the GOP's attack on 'woke' Wall Street
"Bankrolled by mysterious donors, a little-known group named Consumers' Research has emerged as a key player in the conservative crusade to prevent Wall Street from factoring climate change into its investment decisions.
On Dec. 1, the group joined 13 state attorneys general in calling for a federal regulatory agency to investigate Vanguard, one of the world's three biggest financial asset managers. Consumers' Research accused Vanguard of "meddling with [the] energy industry to achieve progressive political goals at the expense of market efficiency."
Within days, Vanguard announced it was quitting a coalition called the Net Zero Asset Managers Alliance and shelved its own modest pledges to cut the amount of greenhouse gas emissions linked to companies in which it invests. Leaders of Consumers' Research were surprised - and elated.
"I knew we had found something important," said Will Hild, who became executive director of the organization in March 2020, just as the pandemic hit. "But I didn't know Vanguard would just capitulate."
Vanguard didn't put it that way. In a statement, it affirmed its commitment to "helping our investors navigate the risks that climate change can pose to their long-term returns," despite leaving the business coalition.
Even so, Hild's group and other opponents of "woke capitalism" are feeling emboldened now that Republicans control the House of Representatives. They see themselves as part of a political alliance that can scrutinize and possibly derail the environmental, social and governance - or ESG - goals of corporations and the Biden administration.
Some big Wall Street firms - most notably BlackRock, State Street, Vanguard and Fidelity Investments - have publicly embraced sustainable investing, partly because of investor demands and pressure on businesses to speed up climate measures.
But Republicans have promised to reverse what Rep. Garland "Andy" Barr (R) called a "cancer on our capital markets." In mid-December, Barr and Sen. Mike Braun (R-Ind.) introduced legislation to nullify a Labor Department regulation that allows ESG strategies to be used in retirement plans. In addition, Barr and Rep. Bill Huizenga, (R-Mich.) hope to revive legislation they introduced in December that would block the Securities and Exchange Commission from requiring publicly traded companies to disclose their climate risk.
Consumers' Research is one of several dark-money groups - nonprofits that seek to influence policy without disclosing their donors - that hope to derail the sustainable investments push. They often work in tandem with various GOP-led organizations, including the State Financial Officers Foundation, whose top donor is Consumers' Research, according to Hild.
These activists hope that House leaders will haul corporate executives before Congress to defend their ESG practices. The hearings will examine how many financial asset managers have used their large shareholdings to pressure other companies to curtail greenhouse gas emissions, improve sustainability or bolster corporate governance.
The Center for Political Accountability's president, Bruce Freed, whose nonprofit advocates for corporate transparency, said the goal of such groups is obvious - to pressure CEOs into submission. "There's a climate of intimidation that companies are facing today," he said.
Some companies are proving to be easier to pressure than others. Vanguard, which has roughly $7 trillion under management, has long been leery of making environmental commitments. Its most recent pledge to remove carbon emissions was a fraction the size of BlackRock's. When it exited the Net Zero Asset Managers Alliance, the firm said that such agreements can be constructive but can "also result in confusion about the views of individual investment firms. That has been the case in this instance."
With a name that belies its turn to the right, Consumers' Research was founded in 1929 by Frederick J. Schlink and Arthur Kallet - co-authors of "100,000,000 Guinea Pigs," an exposé of food and drug risks at the time. The group became the nation's first independent organization to test and report on consumer products. A labor dispute led to the spinoff of what became the well-known Consumer Reports.
The original group turned to criticizing policy. In 1981, M. Stanton Evans - an editor at both the conservative National Review and Human Events - became editor of Consumers' Research, which abandoned product assessments.
Over the past three years, Consumers' Research has morphed into a self-styled watchdog of liberal causes. It has singled out ESG, which it argues harms consumers, reduces investment returns and contributes to inflation. In 2021, its budget grew tenfold to more than $8 million, according to its 990 tax form. Nearly $6 million came from DonorsTrust, a conservative billion-dollar charity, according to its 990 tax document, though Hild declined to provide details. He said the largest single donation was in "the low seven figures" and the 2022 budget would end up closer to $10 million.
While Hild depicts his group as a consumer watchdog, others see it as a right-wing front group with anonymous donors seeking to stall action on climate change.
Erich Pica, president of Friends of the Earth, said in an email that "there is a deep irony with Republicans opposing ESG while pushing companies to have unfettered free-speech" thanks to Supreme Court cases allowing unlimited campaign spending by corporations and outside groups.
Hild, however, says Consumers' Research is all about focusing on corporations, but with a different agenda than those of liberal groups. "We want to educate consumers about the issues important to their interests," he said.
In 2021, the group paid $1.6 million to the law firm Jones Day to file suit against the Consumer Products Safety Commission, arguing that its members should not be shielded from being fired by Congress or the president. The case is on appeal.
That same year, Consumers' Research took aim at the Federal Communications Commission, arguing that the FCC's Universal Service Fund - which takes money from one area of the country and provides it to underserved areas - is "an unconstitutional tax raised and spent by an unaccountable federal agency." It paid $400,000 to the law firm of GOP veteran Boyden Gray to handle the case.
A graduate of Georgetown University Law School, Hild spent a decade among Washington's conservative and libertarian organizations, including the Federalist Society, where he worked on initiatives to limit the federal government's ability to set new regulations. Leonard A. Leo, the Federalist Society's co-chairman who helped persuade President Donald Trump to embrace three conservative Supreme Court nominees, has been one of Hild's mentors. Hild called Leo "a good friend and adviser to Consumers' Research."
"Consumers' Research and its leader Will Hild are executing the most impactful pushback I know against ESG and other aspects of woke corporate culture," Leo said in an email. "It's time that businesses that are out of step with the sentiments of most Americans pay a price for their standing up for woke special interest instead of consumers."
Hild also worked at Philanthropy Roundtable, where he said he aided donors who wanted to pursue policies to "increase the percentage of children who get to benefit from growing up in a two-parent household."
Hild now runs a staff of just under a dozen people, half of them interns. They issue brief reports, links or videos on BlackRock's ESG stance, its chief executive, Larry Fink, and its ties to China. And they go after other companies, such as State Farm - which Consumers' Research said was giving inappropriate books to kindergartens about gender identity - and Levi Strauss, whose chief executive once asked customers to leave guns at home. On its website, Consumers' Research calls State Farm "a creepy neighbor" and terms Levi Strauss "woke washed." State Farm did not return calls or emails, and Levi Strauss declined to comment.
While many environmentalists say BlackRock has been a laggard in decarbonizing its portfolio, Fink has called for a shift toward clean energy. In January at the Davos, Switzerland, economic forum, Fink said he was "very optimistic on the U.S. and its decarbonization process."
To hit back against climate-minded investment companies, Consumers' Research has worked with Republican politicians in several states. Texas, Louisiana, Florida, West Virginia and Missouri, among others have moved to bar BlackRock and other firms from managing all or part of their pensions.
To recognize state politicians, Consumers' Research hosts regular events and prizes. A year ago, it gave the "Consumers' Champion Award" to West Virginia Treasurer Riley Moore for defending his state "against the progressive ESG agenda." Mark Brnovich, then Arizona's attorney general, also won a Consumers' Champion Award.
This month, 21 Republican state attorneys general sent a terse letter to two corporate proxy advisers, Institutional Shareholder Services and Glass Lewis, challenging their ESG practices.
In what could be seen as a dress rehearsal for congressional hearings, a Texas state Senate committee quizzed senior executives of BlackRock, State Street and ISS for more than six hours in mid-December.
Senators pressed Dalia Blass, BlackRock's head of external affairs, about whether the firm's membership in Climate Action 100 had created a "bias" against investing in a Permian Basin oil project vs. a solar project.
"We do not use ESG scoring for our investments," she said, adding that its one bias was "to get the best risk-adjusted returns for our clients."
Many financial analysts say eliminating analysis of climate risks would be shortsighted for elected officials and for corporations. Such restrictions would "oversimplify the issue," said Susan H. Mac Cormac, a partner and ESG expert at the law firm Morrison Foerster. She said many Wall Street strategies "are fundamentally part of risk assessment and are specifically tied to improving returns."
But Hild said his group will continue to focus on BlackRock and other companies, with an overall aim "to end the scam on consumers that is ESG."
Like BlackRock and Vanguard, "any companies engaging in the same sorts of behavior are on notice they could be our next targets," he said."
Philip Hamburger brings some compelling arguments and he's been quoted by many prominent Jurists including Justice Thomas in a case I read the other day from 2014. He's on the Board of the National Civil Liberties Alliance in DC along with retired DC Circuit Appealate Court Judge "the FHFA is acting no better than a Banana republic." Brown.
The NCLA is very focused on making life for Americans more Liberty focused and less victims of federal government agency overreach, which is exactly what happened to us!
As a matter of fact, they brought BOTH Seila Law AND the current CFPB cases to the SCOTUS.
They also brought the SEC Seperation of Powers issue that was heard in November with a decision likely by this Summer.
https://nclalegal.org/moroney-cfpb/
https://nclalegal.org/cochran-v-sec/
WSJ 01/23/23: "Democrats want the Federal Housing Finance Agency (FHFA), which supervises government-sponsored enterprises Fannie Mae and Freddie Mac, to establish "anti-price gouging protections" and "just cause eviction standards" in rental properties with government-backed mortgages. These are their euphemisms for rent control and eviction bans.
Democrats also want the Federal Trade Commission to issue "new regulation defining excessive rent increases" as an unfair trade practice. This would be an enormous usurpation of power since the FTC can only regulate interstate commerce and activities that affect it. Most landlords aren't engaged in interstate commerce, and housing is regulated by states and localities.
Democrats also want the White House to dictate local housing policy by conditioning Department of Housing and Urban Development (HUD) grants on localities "mitigating cost burden and adopting anti-rent gouging measures." So if cities want federal funds to build more housing for their homeless, they'd have to cap rents.
If there's any consensus in economics it's that rent control achieves the opposite of its intended goal. It leads to housing shortages by discouraging new development and maintenance of existing properties. Rents rise faster in properties not subject to controls. Even 60% of California voters rejected a ballot measure in 2020 to expand rent control. We can hope the White House pushes back against this economic destruction, but the last two years aren't cause for optimism."
Hopefully you can get your money back from Amazon on that book because the corporate debt of Fannie Mae is rated AAA (but not the JPS) and I am still waiting for a JPS poster to show me an example of a restructuring on 2 corporations making $20B a year in Net Income, with approximately $100B in capital, and that are lynchpins of the $13T Secondary Mortgage Market in the US.
https://capitalmarkets.fanniemae.com/debt-securities
Thanks for the time saving tip. No offense, but I'd rather hear it from someone wearing a black robe !
We missed you yesterday, were you and the Fulcrum gang working on that giant white surrender flag?
Did you guys decide on black or crimson letters for the "The Great Oz Never Losses!" embroidery on the white flag?
Here's a tip for you and the Fulcrum gang:
The next round of litigation will likely be in the 5th or 8th Circuits (New Orleans or St. Louis), so maybe you guys can get cheap flights if you book early enough!
I believe I read somewhere they will consider it at a mid to late February conference, so probably a couple weeks from now. They could schedule the CFPB case late this term or wait until the Fall Term, if they accept the federal government petition for a Writ of Certerrori.
Remember the $100B MBS Settlements from the Garbage PLMBS LOANS the Gubmint Regulator told Fannie and Freddie to buy? Swept right into the Treasury's coffers!
"It also coupled regulatory and criminal enforcement with public finance in novel ways—raising more than $100 billion through “settlements” of investigations into bank mortgage practices and other matters, described cursorily in agency press releases and lightly reviewed court filings; "
"Many (not all) of these actions were taken independently of APA or other legal procedures—no notice, no comment, just a press release, website posting, or conference call. The explanations offered for the actions often consisted of little more than management convenience or congressional intransigence. Some of them were effectively immune from judicial review because of standing requirements or the acquiescence, enthusiastic or reluctant, of the immediately affected parties. Where statutory rewrites did get into court, the judicial response was mixed and remains a work in progress as of this writing. "