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Great job on the bold, thanks! The major structural problem with these federal agencies is that by delegating Congressional, Executive, and (sometimes Judicial power) power in one single agency (aka the 4th Branch of Government) it invites abusive and coercive governmental overreach like we saw from DeMarco, an Unelected Bureaucrat.
FHFA is worse because it is free from having their $300m+ annual budget and use to have a Director insulated from POTUS.
Small wonder, that the FHFA used its Incidental Powers under HERA to keep their paymaster in perpetual conservatorships!
James M Landis (wrote the sec Act in 1934 under a 'Scotch fueled weekend' and became the 1st SEC Director) and President Woodrow Wilson both advocated for the creation and expansion of federal agencies.
They kept saying that these "experts in the field" know better than our elected representatives in Congress how to manage government effectively and efficiently.
Do you think Edward DeMarco on August 17, 2012 with practically ZERO analysis from his staff was some type of "EXPERT" when he Nationalized 2 of the largest financial Corporations in the world?
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Right now I'm reading Judge Oldham's critique of the federal government agency structures fundamental flaws in a concurring majority opinion from a 16 Judge EnBanc Panel ruling that is currently in the SCOTUS this term and will be decided this Summer (I added bold):
https://nclalegal.org/cochran-v-sec/
"Landis’s solution to this problem was the same as Wilson’s: eliminate
or at least minimize the role of courts in our constitutional system.
Obviously, it would be best to eliminate the courts altogether. Otherwise,
“lodg[ing] a great, interpretive power in the judiciary involved the risk that a
policy, which initially was given to the administrative to formulate, might be
thwarted at its most significant fulcrum by judgments antagonistic to its
own.” Id. at 97. It would be far better, in Landis’s view, that the SEC could simply interrogate its targets ad infinitum—without the Jones Court ever
getting the right to interfere.
But if courts simply must be part of our constitutional order, Landis
said, their role must be minimized as far as possible. Landis disputed the idea
that all administrative action must be judicially reviewable. Id. at 124. Rather,
courts should be confined to determining little things—like “the regularity
of the procedure employed by the administrative” agency.
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No, that affordable housing money wasn't in the final version of the bill. That's why Diane Yentel was so unhappy.
How possibly are 2 corporations making $20B a year in after tax Net Income distressed?
I heard they have close to $100B in Tier 1 Capital and would have more but for the August 17, 2012 Net Worth Sweep.
No, that's different. The $400B was a writedown of a receivable, not actual cash that can be spent.
As far as I'm aware, Treasury's proceeds from selling its common shares can be directed to whatever Biden chooses via orders to Yellen. There might be some restrictions for it to be used on housing in some capacity, but he could just spend the GSE money on what he would have spent the appropriated $100-150B on that was in the version of BBB that didn't pass.
I'll ask you the reverse: what makes you think he can't do just that?
I thought MC said in the interview Navy just posted below that they were going to leave it up to the board on how to do the recap?
JB is having a hard enough time delivering on his campaign promise to forgive student loans and spend an estimated unappropriated $400B.
What makes you think he can "cash out $100B from the theft" and spend it on his affordable housing plan? Didn't he get some affordable housing money in BBB, which unrealizing Americans are paying for through the 10bp guaranty fee on GSE MBS for the next 10 years?
Didn't TH mention in last year or so that the dilution solution was not realistic? Are you going to believe an unemployed electric skateboarder from the beach or a former CFO of Fannie Mae with decades of experience?
Great job! Appreciate your advocacy and maybe the House will use hearings on the GSES to illustrate the different philosophy of R's versus D's when it comes to exit from the 14+ year CONservatorships!
Yesterday the Washington Post did a hit piece on the 5th Circuit and that's were I found the SEC case that will be decided by the SCOTUS by the end of the Summer.
The WP article also pointed out that ideally any new Litigation challenging federal government agency overreach would likely have a fighting chance in the 8th or 5th federal Circuits.
The least favorable according to the article is the US District Court in Northern California.
This Columbia Law Professor and his book, "Is the Administrative State Unlawful?" was quoted and referenced by J. Thomas as well as J. Gorsuch in 2 seperate cases involving the Non Delegation Doctrine.
He's also on the board, I believe with Judge Brown, who was the dissenting Judge in the DC Circuit Court of Appeals Fannie Mae stockholders case, that said, "The federal government is no better than a Banana republic, here!".
The nonprofit is the National Civil Liberties Alliance and they along with the Pacific Legal Foundation are ardent defenders of Liberty in the US, through litigation in the federal courts.
https://nclalegal.org/
The NCLA represented the accountant from Texas who is the Plaintiff in the case that J. Oldham's 5th Circuit Appealate En Banc 16 Judge Panel concurring opinion was written for.
What's the emergency to recapitalize again?
That's EXACTLY right! So why not make lemonade out of the lemons, launch a Seperation of Powers legal action asking the court to invalidate an agency action (e.g., the NWS) and dismantle this abusive and coercive governmental overreach power from the federal agencies?
The 1st part worked in Seila Law and Collins, the remedy didn't.
Shouldn't we try again under another violation of the Seperation of Powers in HERA?
Oh yeah if we lose we continue with the perpetual conservatorships.
Fantastic! Hey, I think I'm finally figuring out WTF happened here - THERE IS ZERO ACCOUNTABILITY TO THE PEOPLE WHEN THESE FEDERAL AGENCIES RUN AMOK WITH UNCHECKED POWER!
Didn't OFHEO want the GSES to buy the toxic PLMBS? Also, I think to some extent the PLMBS they had to purchase did much better than many of the TBTF banks PLMBS held on the TBTF balance sheets.
But the PLMBS explosion was also enabled by Greenspan and his Libertarian approach of "the free market knows best" and the inability of the federal regulations to question the garbage in/garbage out PLMBS proliferation in the financial Secondary Mortgage Market.
In 2008, the GSES made over half their profits from their Retained Portfolios. They did this by issuing low cost corporate debt that was assumed worldwide to be virtually as safe as US Treasury debt through the implicit government guarantee.
The Net Interest Margin (what the mortgage portfolio earns less cost of debt) was over 100 basis points as I recall at the time.
These earnings helped cross subsidize lower guarantee fees on MBS.
The reason UST put the provision for no corporate debt issuance in the PSPA was to make sure that the Retained Mortgage Portfolios were reduced.
And that's exactly what happened.
Today the Retained Mortgage Portfolios are around $100B, way down from the 2008 levels.
Do you remember how upset Hank Paulson (and Congress?) was when faced with the realization that he had to rescue the financial establishment? He was p*ssed! I remember watching him at some press conferences and quickly thereafter Hank and Bernanke let Bear Stearns fail. They later regretted that later.
HERA was enacted in the Summer of 2008 in response to the Great Financial Crisis, with extraordinary powers for the FHFA.
4 years later in the Summer of 2012, FHFA and UST Nationalized the GSES taking all the profits and economic rights of shareholders into perpetuity.
How do you think the story ends?
Judge Oldham's concurring opinion in a 16 Judge EnBanc Panel ruling in the 5th Circuit now at the USSCT on the fundamental problem with the 4th branch of government (I added bold):
"Section 78y reflects the
thinking of men like Woodrow Wilson who argued that universal suffrage
would make the three branches of government ignorant, indolent, and
incapable of regulating modern affairs. Wilson’s solution? He wanted
administrative agencies to operate in a separate, anti-constitutional, and anti-
democratic space—free from pesky things like law and an increasingly
diverse electorate. One of Wilson’s acolytes, James Landis, was the SEC’s
founding father and drafted § 78y into the original Securities Exchange Act.
Landis hoped that the SEC could set upon Americans without interference
from courts—unless and until the SEC gave courts permission to review its work. That is obviously not how our government is supposed to work. And
in the Landisonian view, that’s precisely the point.
The balance of this opinion joins the dissent in considering “the 80-
plus year history of the SEC,” the purported policy “benefit[s] of agency
expertise,” and the supposed “efficiency” purpose of § 78y. Post, at 70, 90,
94 (Costa, J., dissenting). Part I explains the intellectual and statutory history
of § 78y. Part II explains Landis’s purposes and policy objectives. Then Part
III shows that § 78y falls short of Landis’s goal. It fails to give the SEC the
separate, anti-constitutional, and unaccountable space Landis wanted. And
all of this underscores why it’s important to interpret the words that
Congress enacted rather than the purposes Landis pursued.1
I.
The separation of powers is the defining feature and virtue of our
Constitution. As James Madison wrote, “[t]he accumulation of all powers,
legislative, executive, and judiciary, in the same hands, whether of one, a few,
or many, and whether hereditary, self-appointed, or elective, may justly be
pronounced the very definition of tyranny.” The Federalist No. 47, at
301 (C. Rossiter ed. 1961). So the Founders separated the legislative,
executive, and judicial powers into three distinct branches and then balanced
them against one another. See The Federalist No. 51, at 321–23;
Bowsher v. Synar, 478 U.S. 714, 722 (1986) (“Even a cursory examination of
the Constitution reveals the influence of Montesquieu’s thesis that checks and balances were the foundation of a structure of government that would
protect liberty.”).
Wilson and Landis fundamentally disagreed with the Founders’ vision. Wilson and Landis thought the accumulation of all powers into one set of hands was—far from a vice—a virtue. And they wanted those all-powerful hands connected to an administrative agency, far away from the three branches of government the Founders worked so hard to create, separate, and balance. And most of all, Wilson and Landis wanted power as
far away from democracy and universal suffrage as possible."
https://nclalegal.org/cochran-v-sec/
https://www.supremecourt.gov/docket/docketfiles/html/public/21-1239.html
Docket for 21-1239 - Supreme Court https://www.supremecourt.gov/docket/docketfiles/html/public/21-1239.html
Well I think part of the problem is that federal agencies are exercising too much power without adequate oversight.
Another problem is that BOTH political parties aren't fans of the GSES and view them as potential funding for their needs. Then there's the ZERO advocacy for the GSES in the Executive and Legislative Branches.
The Lamberth Jurors were independent, but 1/2 of them saw the injustice, the other half didn't.
If I had to choose one person, I suppose it's Edward DeMarco. But it was done jointly with the UST, which was under control of the Obama administration.
You know and I know that the federal government continues hiding the facts from the American people through the Executive Privilege and National Security exemptions to Discovery.
Shockingly, DeMarco testified during the Lamberth trial that he didn't even have anyone from his staff explore alternatives to the NWS and believed that since the US Congress was going to fix the secondary mortgage markets in the US it was okay.
DeMarco also testified that the he actually believed that the NWS was a viable means of conserving and preserving the GSES.
What bothers me the most is that you've got to ask yourself how does one unelected Bureaucrat, DeMarco, with zero analysis of the alternatives decide to Nationalize 2 of the largest private corporations in the world?
I realize that you're focused on drumming up new buyers for the Fulcrum Security so you post here. Good luck with that.
If a Shareholder is going to challenge the agency action here, the 5th Circuit is a good forum to have it heard initially, don't you agree?
From todays WP: "The U.S. Court of Appeals for the 5th Circuit in New Orleans has long leaned conservative. But the arrival of a half-dozen judges picked by President Donald Trump - many of them young, ambitious and outspoken - has put the court at the forefront of resistance to the Biden administration's assertions of legal authority and to the regulatory power of federal agencies. Their rulings have at times broken with precedent and exposed rifts among the judges, illustrating Trump's lasting legacy on the powerful set of federal courts that operate one step below the Supreme Court. Even some veteran conservatives on the court have criticized the newcomers for going too far.
Four of the six new judges have worked for Republican politicians in Texas, and some are seen as possible contenders for a future opening on the Supreme Court if a Republican is elected president. With their provocative, colloquial writing styles, the judges are elevating their profiles in far-reaching opinions and public appearances, calling out "cancel culture," wokeness and sometimes even one another.
"Any school that refuses to stand up against cancel culture - and instead caters to it, and even engages in it - is not a school that is interested in educational diversity. And it's not a school I want to have anything to do with," Judge James C. Ho wrote in an article explaining his proposed boycott on hiring Yale Law School students as law clerks because of concerns about free speech on the campuses of elite institutions.
The 5th Circuit reviews appeals from Texas, Mississippi and Louisiana, working from a converted, historic post office building in downtown New Orleans. Besides the expansive geographic area the court covers, it has outsize influence in part because its judges preside over a steady flow of politically potent challenges to the Democratic president filed by aggressive, conservative state attorneys general.
Liberal organizations often challenged Trump's policies in Northern California courts, where most judges were picked by Democrats. But conservatives who strategically file lawsuits against the Biden administration in Texas have an even clearer advantage: They can almost guarantee initial review by a conservative judge and then appellate review by the 5th Circuit, where the Trump picks are routinely the dominant voice.
"These are the most conservative federal judges in the country having cases specifically brought so that they can decide them at a time when the Supreme Court is reversing some of their decisions, but not all of them. There's nothing to lose," said Steve Vladeck, a University of Texas School of Law professor whose analysis of "judge shopping" in Texas was the subject of a recent brief filed in advance of a Supreme Court case.
Alexa Gervasi, a former 5th Circuit law clerk who directs the Georgetown Center for the Constitution at Georgetown Law, said it is no surprise that the court is issuing noteworthy rulings in so many significant cases. "The reason it seems like there's so much fire coming from the 5th Circuit is that they are getting really divisive cases," said Gervasi, who also has practiced before the court. "If you send controversial cases to the 5th Circuit, you're going to get controversial opinions."
Trump's imprint and legacy
Before he left the White House, Trump set a one-term record by successfully installing more than 220 federal judges, after years in which then-Senate Majority Leader Mitch McConnell (R-Ky.) stalled nominees put forward by President Barack Obama.
Of the 17 full-time spots on the 5th Circuit bench, 12 are held by judges nominated by Republican presidents and four by judges picked by Democratic presidents. One seat remains unfilled by Biden. The appeals courts almost always hear cases in three-judge panels drawn mainly from the court's full-time judges, making the odds of having more than one Democratic pick on any panel unlikely. Only the St. Louis-based 8th Circuit has a higher percentage of judges nominated by Republican presidents, according to statistics compiled by Russell Wheeler at the Brookings Institution.
Aaron Streett, a Houston-based lawyer who practices before the 5th Circuit and was a law clerk to Chief Justice William H. Rehnquist, said the new judges are at the "leading edge of originalist and textualist ideas percolating up in law reviews and conservative public-interest law firms."
"You've got really bright, creative judges who are talented writers and popularizers of these jurisprudential principles," Streett said, adding that they are willing to take what the Supreme Court has said in the past decade and "apply those decisions to their fullest logical extent."
Last fall, a trio of Trump judges ruled that the watchdog Consumer Financial Protection Bureau, long a target of Republican lawmakers, is unconstitutionally funded - jeopardizing enforcement actions by the agency, which was created by Congress in response to the 2008 financial crisis. The ruling went beyond an earlier Supreme Court decision, which found the agency's structure problematic but did not say its funding authority was invalid."
"The Bureau's perpetual self-directed, double-insulated funding structure goes a significant step further than that enjoyed by the other agencies on offer," wrote Wilson, joined by Willett and Engelhardt.
Within days of the 5th Circuit's decision, defendants in other CFPB enforcement actions asked the court to dismiss claims against them. The Justice Department has asked the Supreme Court to intervene."
Well that's the problem for us, so long as the USSCT or another high level appellate panel doesn't see the injustice here we will continue with the status quo.
The 5th Circuit Appealate Panel Decision in the CFPB case invalidated a federal agency action based on the double insulated funding mechanism in Dodd Frank.
An argument could be made that FHFA has a double insulated funding mechanism as well.
The Administrative State in America has really run amok and the amount of rules and regulations and agency actions they produce yearly (from Unelected Bureaucrats here in DC) is alarming and abusive and coercive sometimes as in the August 17, 2012, Net Worth Swipe.
The fundamental problem is that the US Congress can't pass all these laws and rules and regulations like the federal agencies can. Despite Article 1, Section 1 of the US Constitution stating, "All Laws shall be vested in the Legislature", the US Congress for the last 130 years+ has DELEGATED their power over to these federal agencies (mostly controlled by the Executive Branch). Most federal agencies have a legislative, Judicial, and executive branch inside them with jurisdiction over selected parts of the economy or society.
Benjamin Cardozo said in Schechter about one federal agency, it was "Delegation run riot", this 9-0 decision was RIGHT BEFORE FDR THREATENED TO PACK THE SCOTUS (SCOTUS has given federal agencies MORE DISCRETION over the 80 years afterwards).
The good news for shareholders is that the current majority at the SCOTUS are aware of the problem and picking cases to reinforce the Nondelegation Doctrine.
But I'm pretty sure that the majority at SCOTUS don't like the GSES to begin with since they are an example of federal government intervention in the private capital markets.
That's interesting thanks, could be a potential lawsuit if the FHFA and UST pull the trigger on a cramdown.
I think MC said he was going to leave it up to the board of Directors to decide any future capital raises, maybe SLT feels the same way.
Seems like the status quo is the safest way for the Decision Makers, as capital continues to rebuild on the books organically and legal uncertainty surrounding the 14+ year CONservatorships clouds the issue.
The current administration may simply come to the realization that they can't do want they want through federal agencies that they couldn't have gotten through the US Congress to begin with.
The $400B student loan forgiveness through the Education Department is a prime example. Oral arguments are set for the end of February.
https://www.cnbc.com/2023/01/29/3-predictions-if-supreme-court-rules-against-student-loan-forgiveness.html
HeeeeHeeee! Always straight to the point aren't you? Doesn't hurt to keep asking though, maybe one Judge somewhere will agree, all we can do is put our best arguments forward.
They're never going to release us from the CONservatorships anyway, right!
955, I read this paper yesterday (J. Gorsuch listed the paper in Footnote 6 of a Nondelegation opinion) and it gives a great analysis of the federal government agency structure and history, it's a good read over several hours.
Can the Administrative State be Tamed?
Christopher DeMuth
Journal of Legal Analysis, Volume 8, Issue 1, Spring 2016, Pages 121–190, https://doi.org/10.1093/jla/law003
Published: 29 February 2016
https://academic.oup.com/jla/article/8/1/121/1751551
"Another departure, also in financial regulation, was the combined actions of the Department of Housing and Urban Development, several bank regulatory agencies, and the government-sponsored corporations Fannie Mae and Freddie Mac that produced a vast expansion of “nonprime” mortgages to promote homeownership among persons of modest means and members of minority groups. 12 The regulators encouraged banks and other financial institutions to relax traditional mortgage underwriting standards (eliminating down-payment and income-documentation requirements and the like) and to extend these mortgages to borrowers in lower-income and minority communities. Fannie and Freddie subsidized the mortgages (through implicit federal guarantees on their own borrowing) by purchasing them in large numbers, packaging and marketing them as derivative securities (“mortgage-backed securities” or MBSs), and purchasing large quantities of MBSs created by private banks."
It appears the Nondelegation Doctrine is starting to come back in fashion in response to these out of control federal agencies.
Exhibit A of an out of control FHFA is Ed DeMarco deciding to Nationalize the 2 lynchpins of the American Secondary Mortgage Market.
There's something wrong when 1 man, an Unelected Bureaucrat (DeMarco) in DC, can unilaterally without any thought or analysis do this in America.
No name, to think these 14+ year temporary conservatorships (with no clear end in sight) of 2 corporations who make $20B in NET INCOME per year will result in common shares being zeroed out may be a mistake.
Have a Nice Day!
Wow, are the progressives realizing "the evil hedge fund guys" is a bad argument?
"Meet the Latest Housing-Crisis Scapegoat
Blaming the housing crisis on hedge funds and private equity may be easy, but it’s dead wrong."
https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/
Then at her confirmation hearing she says it's up to Congress to decide the future of the GSES. SLT didn't even bother to put "End the Conservatorships" in her Annual Scorecards like her predecessor.
Hold the shell closer to your ear, it's saying, "Glen, there is no dilution solution and instant recap coming, there is no dilution solution and instant recap coming, there is no dilution solution and instant recap coming...."
The last thing JB wants to do is throw the hedge fund guys or big corporations a bone, Elizabeth and Bernie and the progressives would never let him.
The federal circuit courts aren't equipped to issue JPS stock conversions to common, that's bankruptcy court and that's not were highly profitable corporations end up especially Fannie Mae and Freddie Mac.
SLT is the first experienced bank regulator as FHFA Director and she already knows the status quo continues to build capital organically and wants Congress to decide the future of the GSES.
How many bankruptcies did you do where the corporations earn $20B in NET INCOME yearly? I'm the writing the number below....
Justice Thomas lambasting the Administrative State (aka 4th Branch of Government): "We
have too long abrogated our duty to enforce the separation
of powers required by our Constitution. We have overseen
and sanctioned the growth of an administrative system
that concentrates the power to make laws and the power
to enforce them in the hands of a vast and unaccountable
administrative apparatus that finds no comfortable home
in our constitutional structure. The end result may be
trains that run on time (although I doubt it), but the
cost is to our Constitution and the individual liberty it
protects."
Department of Transportation v. Association of American Railroads , Docket No. 13-1080, March 9, 2015 (Alito, J., concurring, and Thomas, J., concurring in the judgment)
I know, and they don't even want to contribute constructively, it's annoying sometimes, HeeeeHeeee!
I like this Jones Day win in the 5th Circuit, it might apply to HERA as well. I think the SCOTUS will consider the CFPB'S Petition for a Writ of Certerrori in mid February, could be worth paying attention to:
"The Fifth Circuit explained that this unprecedented funding mechanism means that Congress not only ceded direct control over the Bureau's budget by exempting it from annual or other time-limited appropriations or review, but also ceded any indirect control by "providing that the Bureau's self-determined funding be drawn from a source that is itself outside the appropriations process." Slip Op. 30. Accordingly, "the Bureau's funding structure violates the Appropriations Clause of the Constitution and the separation of powers principles enshrined in it." Slip Op. 23.
The court concluded further that because the Bureau promulgated the Payday Lending Rule using unconstitutionally requisitioned funds, vacatur of the Rule was the appropriate remedy: "without its unconstitutional funding, the Bureau lacked any other means to promulgate the rule." Slip Op. 38.
The consequences of this decision are significant. The decision is the first to hold that the Bureau's funding mechanism violates separation of powers, a constitutional error that only Congress can remedy. The court's decision not only will assist others challenging the Bureau's past actions, but also calls into question all the Bureau's current and future actions unless and until Congress fixes this structural infirmity. Given the Bureau's recent and repeated efforts to increase collaboration with state attorneys general, it is also possible that the Bureau may lean even more heavily on states to take investigative and enforcement action until this issue is resolved.
Jones Day filed suit on behalf of the Community Financial Services Association of America and the Consumer Service Alliance of Texas in this matter."
https://www.jonesday.com/en/insights/2022/10/fifth-circuit-rules-cfpb-funding-scheme-violates-appropriations-clause
Here's another article (WSJ) indicating that Americans may be finally reigning in the Administrative State and challenging the Chevron Deverence:
"Judges across the country are rethinking their deference to regulators who stretch the law, and the latest example is thunder out of the Ohio Supreme Court. The Dec. 29 decision deserves more notice as a powerful statement of judicial principles in dealing with an unrestrained bureaucracy.
TWISM Enterprises v. State Board of Registration is a prosaic licensing case by usual standards. TWISM challenged a decision by Ohio regulators denying its application to provide engineering services in the state. The court ruled 7-0 that the regulatory board had essentially rewritten Ohio law by insisting that anyone providing engineering services must be an employee, and not an independent contractor. The statute says no such thing, and the court ruled for the company.
But the court didn't stop there. Writing for himself and three other Justices, Justice Patrick DeWine used the case to step back and examine the doctrine of judicial deference to regulators under Ohio law. That doctrine, embedded at the federal level in the Supreme Court's 1984 Chevron decision, is getting a much-needed re-examination in legal circles.
Justice DeWine swept away competing lines of previous Ohio deference cases to make clear that "the judicial branch is never required to defer to an agency's interpretation of the law." The agency's view "is simply one consideration a court may sometimes take into account in rendering the court's own independent judgment as to what the law is," he writes.
Adios, Chevron deference.
While the ruling applies only in Ohio, Justice DeWine's opinion is notable for taking a broader look at deference and the rethinking taking place across the U.S.
"It is worth noting that we are not alone in recalibrating our approach to agency deference," he writes. "Roughly half the states in the Union review agency interpretations of the law de novo." High courts in Arkansas, Delaware, Kansas, Michigan and Mississippi "have similarly revamped their deference doctrines lately, returning to de novo review."
This is a welcome trend as it restores the proper constitutional understanding of the separation of powers. Whatever the original intention of Chevron deference, it has become a license for regulators to find entirely new meaning in statutes years after they were written. They can do so safe in the knowledge that courts will let them do it.
But as Justice DeWine notes, courts have the final say in interpreting whether agency actions are consistent with the law or usurp it. And courts have a duty to overrule agencies when they exceed their proper legal authority.
Far more is at stake than judicial theory. As Congress has ceased to do its job of writing clear and limited laws, Presidents and many governors have imposed their policy preferences by agency diktat. Then when they are challenged in court, they cite Chevron as an all-purpose get-out-of-judicial-review card. This is tyranny by bureaucracy.
The Biden Administration has pulled this gambit more than any in modern history. Think vaccine and climate mandates and a nationwide eviction moratorium. The U.S. Supreme Court has reined in some of these excesses, and we hope it will do the same on the President's illegal student-loan cancellation this year.
Meantime, the Ohio Supreme Court has provided a constitutional guide that other judges can follow and a necessary warning to willful regulators everywhere."
No name, we've already heard the (1) dilution solution (2) instant recap and (3) the federal government NEVER losses in court.
What else you got?
Just seems counterproductive for jps to trash common and vice versa, doesn't it?
Why not work together focusing on constructive dialogue about the real problem here, federal government overreach?
PLF is a great advocate for helping reign in an out of control administrative state. Historically the 1st federal agency was the ICC, was promoted by Woodrow Wilson, mushroomed under FDR and LBJ, and recently we have unelected Bureaucrats like DeMarco, deciding to Nationalize the 2 lynchpins of the Secondary Mortgage Market in the US.
So what's the hurry for the instant recap anyway. ZERO capital was fine for the previous FHFA Democratic Director, now it's like $100B?
We've been hearing you guys post for YEARS about how instant recap is ALWAYS right around the corner.
Your JPS arguments are always based on (1) the instant recap and (2) the dilution solution. Could you guys come up with another more likely scenario?
Oh yeah, JB wants to spend $100B on affordable housing and cash in the warrants to do it, is that you're message?
That's a frickin joke, he's not having an easy go with the student loan forgiveness and that was an actual explicit campaign promise, is he?
What's your favorite feature of the JPS, the Noncumulative Dividends or is it something else?
Definitely no meaningful remedy from the courts so far, it's still in theory plausible, and you know both JPS and Common positions are worthless with all their Economic Rights transferred to the UST.
The only way for the conservatorships to end is via a route through 1 or more of the federal branches of government.
Aside from the solitary member of Congress or two that occasionally presses the issue, the beleaguered shareholders have a ZERO voice in the federal branches, except for lawsuits were we force Judges to listen to our pleas.
The idea that JPS will come out smelling like roses anytime soon seems a little far fetched to me, mainly because:
(1). The financial establishment loves the elevated gfees.
(2). The NAR likely believes SLT can be persuaded to pass on subsidized mortgages to the current administrations target voter base.
(3). The FHFA was not that long ago content with ZERO capital and there is no capital deficit emergency.
(4). The FHFA knows it gets the best of both worlds in wearing the conservatorship hat as well as the Regulator hat with virtually unlimited power under HERA, and the FHFA sets its own budget without asking anyone for permission.
(5). No explicit Gubmint guarantees fallout whether the GSES are in or out of the conservatorships.
(6). The GSE balance sheets fund almost all the major expensive litigation and they keep winning, so why fear any new lawsuits.
(7). The current administration couldn't care less whether they are in or out of conservatorship and there's more political fallout from exiting, cashing in the warrants or doing anything but the status quo.
Unless the Plaintiff Shareholders get a meaningful win in the courts (which so far seems unlikely) I just don't see a resolution in this administration.
While we wait the GSES build capital organically.
Why don't you update your little chart then on Collins?
Is Sandra just waiting for the US Congress to decide on the future of the Secondary Mortgage Market in the US? When's that going to happen?
Who's working on the dilution solution and instant recap at the UST and FHFA?
Why do you think JB could spend $100B+ on affordable housing by selling the warrants when the power of the purse belongs to our elected representatives in the US Congress?
After you answer those, I've got some more.
Definitely maybe, only ONE way to find out for sure though! After all, I'm from the show me state, HeeeeHeeee. !
"The court's decision not only will assist others challenging the Bureau's past actions, but also calls into question all the Bureau's current and future actions unless and until Congress fixes this structural infirmity."
https://www.jonesday.com/en/insights/2022/10/fifth-circuit-rules-cfpb-funding-scheme-violates-appropriations-clause
Sandra today (I hear you, DOWN with evil Landlords and UP with tenants rights! HeeeeHeeee):
"Statement from FHFA Director Sandra L. Thompson on Tenant Protections
The Federal Housing Finance Agency (FHFA) is committed to ensuring that Fannie Mae and Freddie Mac (the Enterprises) operate in a safe and sound manner while also promoting equitable access to affordable and sustainable housing. As part of our work on the White House Tenant Protection Interagency Policy Council, FHFA will conduct a public stakeholder engagement process to identify tangible solutions for addressing the affordability challenges renters are facing nationwide, particularly among underserved communities. The proposals discussed during this process will focus on properties financed by the Enterprises. Our process will be transparent and seek broad participation from diverse voices.
In the Agency’s 2023 Scorecard, FHFA instructed the Enterprises to explore the feasibility of expanding tenant protections for properties they finance and to identify strategies and activities that would facilitate a greater amount of affordable rental housing supply. FHFA will continue to evaluate the Enterprises’ role in providing tenant protections and advancing available affordable housing opportunities for those in need.
More information:"
Meanwhile, over at TH's blog, ROLG suggests why not take a shot at the ERCF problem:
"I always thought that a lawsuit against FHFA claiming that the ERCF is an invalid administrative rule implementing the statutory requirement of a risk-based capital standard had some merit. There has been substantial success lately challenging administrative agency rule making that goes beyond statutory authority. I wonder if one can convincingly argue, based upon the F/F stress test results that best indicate risk levels, that the capital rule bears no rational relationship to the risk to be insulated against. The stress test results indicate that a much lesser capital standard would suffice…leading to the statutory requirement being imposed of 2.5%
now the most logical plaintiffs with standing would be F/F themselves, but they are not going to bring this suit. but there should be sufficient injury on the part of homeowners with mortgages guaranteed by F/F arising from this administrative rule that would support their standing to bring suit. A class action suit for damages might even be worth examining."
Fisherman's reply: "I had the same thought. In my world (Environmental Consulting), Sierra Club and River Keepers entities are always filing lawsuits against EPA, Fish and Wildlife Service, Army Corps of Engineers and other agencies claiming their rules are arbitrary and capricious. Many go to SCOTUS and seem to get shot down at that point, but some do prevail. I had to find a new job when the EPA rule covering 316b of the Clean Water Act was struck down by the 2nd circuit in NY, resulting in suspension of my projects at the time. That playbook seems relevant in this scenario as well."
I think Hamish Hume on his first or second cross examine of Ed DeMarco pointed this feature out during the Lamberth trial. As I recall, Ed DeMarco said he never really considered alternatives to sweeping all the future profits of the GSES into perpetuity and he figured Congress wanted to "fix the broken system".
I do remember leaving the Lamberth trial that day believing that Ed DeMarco WAS THE MOST INCOMPETENT DC BUREAUCRAT IN HISTORY!