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Their is no plan at FHFA or UST to do anything except defend the lawsuits and rebuild Tier 1 Capital from what I can see. The Status Quo seems to placate all interested parties EXCEPT the shareholders.
DeMarco Nationalized the GSES according to his testimony at Lamberth's trial so Congress could "fix the broken system" and he wouldn't have to "worry about the expiration of the credit line with UST."
Of course he did it according to his testimony at Lamberth's trial without ANY consultation or analysis from his senior staff.
Wow! Any idea how much "crypto" is even out there? I think it's still being studied by the federal reserve but it could (and maybe has) developed into a problem for the financial system.
Here's the latest statement from the federal reserve:
January 3, 2023
Joint Statement on Crypto-Asset Risks to Banking Organizations
The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit
Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC)
(collectively, the agencies) are issuing the following statement on crypto-asset1 risks to banking
organizations.
The events of the past year have been marked by significant volatility and the exposure of
vulnerabilities in the crypto-asset sector. These events highlight a number of key risks associated
with crypto-assets and crypto-asset sector participants that banking organizations should be
aware of, including:
• Risk of fraud and scams among crypto-asset sector participants.
• Legal uncertainties related to custody practices, redemptions, and ownership rights, some of
which are currently the subject of legal processes and proceedings.
• Inaccurate or misleading representations and disclosures by crypto-asset companies,
including misrepresentations regarding federal deposit insurance, and other practices that
may be unfair, deceptive, or abusive, contributing to significant harm to retail and
institutional investors, customers, and counterparties.
• Significant volatility in crypto-asset markets, the effects of which include potential impacts
on deposit flows associated with crypto-asset companies.
• Susceptibility of stablecoins to run risk, creating potential deposit outflows for banking
organizations that hold stablecoin reserves.
• Contagion risk within the crypto-assetsector resulting from interconnections among certain
crypto-asset participants, including through opaque lending, investing, funding, service, and
operational arrangements. These interconnections may also present concentration risks for
banking organizations with exposures to the crypto-asset sector.
• Risk management and governance practices in the crypto-asset sector exhibiting a lack of
maturity and robustness.
• Heightened risks associated with open, public, and/or decentralized networks, or similar
systems, including, but not limited to, the lack of governance mechanisms establishing
oversight of the system; the absence of contracts or standards to clearly establish roles,
responsibilities, and liabilities; and vulnerabilities related to cyber-attacks, outages, lost or
trapped assets, and illicit finance.
It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled
do not migrate to the banking system. The agencies are supervising banking organizations that
may be exposed to risks stemming from the crypto-asset sector and carefully reviewing any proposals from banking organizations to engage in activities that involve crypto-assets. Through
the agencies’ case-by-case approaches to date, the agencies continue to build knowledge,
expertise, and understanding of the risks crypto-assets may pose to banking organizations, their
customers, and the broader U.S. financial system. Given the significant risks highlighted by
recent failures of several large crypto-asset companies, the agencies continue to take a careful
and cautious approach related to current or proposed crypto-asset-related activities and exposures
at each banking organization.
Banking organizations are neither prohibited nor discouraged from providing banking services to
customers of any specific class or type, as permitted by law or regulation. The agencies are
continuing to assess whether or how current and proposed crypto-asset-related activities by
banking organizations can be conducted in a manner that adequately addresses safety and
soundness, consumer protection, legal permissibility, and compliance with applicable laws and
regulations, including anti-money laundering and illicit finance statutes and rules.Based on the
agencies’ current understanding and experience to date, the agencies believe that issuing or
holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or
decentralized network, or similar system is highly likely to be inconsistent with safe and sound
banking practices. Further, the agencies have significant safety and soundness concerns with
business models that are concentrated in crypto-asset-related activities or have concentrated
exposures to the crypto-asset sector.
The agencies will continue to closely monitor crypto-asset-related exposures of banking
organizations. As warranted, the agencies will issue additional statements related to engagement
by banking organizations in crypto-asset-related activities. The agencies also will continue to
engage and collaborate with other relevant authorities, as appropriate, on issues arising from
activities involving crypto-assets.
Each agency has developed processes2 whereby banking organizations engage in robust
supervisory discussions regarding proposed and existing crypto-asset-related activities.3 Banking
organizations should ensure that crypto-asset-related activities can be performed in a safe and
sound manner, are legally permissible, and comply with applicable laws and regulations,
including those designed to protect consumers (such as fair lending laws and prohibitions against
unfair, deceptive, or abusive acts or practices). Banking organizations should ensure appropriate risk management, including board oversight, policies, procedures, risk assessments, controls,
gates and guardrails, and monitoring, to effectively identify and manage risks.4
I think we are the ONLY unresolved financial intermediaries to not have been able to payback the federal government.
Hard to believe that DeMarco could on his own decide on August 17, 2012 to Nationalize the GSES, transfer $100,000,000,000+ of much needed capital to the US Treasury in 2013 and more later on in return for NOTHING.
And no one says anything or complains about it except the shareholders.
How does crypto relate to the mission of affordable housing in the US? Just crazy, inevitably there will be another financial crisis, I wonder if Crypto will the first domino to trigger it?
We'll see, but I think the FHFA's past will be a huge caveat emptor for future buyers of Capital in a 1st Loss Position and like David Maxwell told me in 1990, "Political Risk is the Number One risk facing Fannie Mae".
TH said it the other day.
But for the FHFA we would have been out of the conservatorships years ago and receiving a decent return on our investments like all the other financial intermediaries that received a government bailout.
Both MC and SLT have said, "It will be the largest IPO in history!" But if anyone does their due diligence they will see just how badly (a civilian conservator would be behind bars by now for implementing the NWS) their new partner has treated the current round of 1st Loss Private Capital position Shareholders.
They are going to have to ask themselves:
1. Can I trust the US government as a partner when it says one thing like the conservatorship will be temporary and then takes all the future profits for itself after inflating noncash losses and subsequently reversing them for over $100,000,000,000 in 2013 alone?
2. How do I know that the federal government won't do it again and look at how ineffective the courts have been?
Well, what do you think about the Seperation of Powers issue in CFPB that recently came out of the 5th Circuit Appealate Panel and the DOJ has petitioned for a Writ of Certerrori at the USSCT, it's about invalidating a past agency decision due to the unconstitutional double insulated from Congressional Appropriations Oversight funding for the CFPB in Dodd Frank?
I finally reread parts of the Fairholme Funds and consolidated cases 3 Judge Panel opinion (I think it was 3-0 to deny Plaintiffs Shareholders even a trial on the 5th Amendment Takings Cases) from last February 2022, here's some quotes in quotation marks from last year of what that opinion said which is now the unequivocal law of the land when it comes to Takings Clause case lawsuits involving regulated financial institutions in Amerika.
Here's some rough observations I gleaned from the opinion.
1. Basically financial institutions regulated by the federal government can't exclude the federal government from coming on their property and inspecting their books, therefore no right of exclusive use of their property therefore no taking (but that's about physical real property not the economic rights property inherent in shares of stock, right? Good enough for Gubmint work though apparently, WE'RE TALKING A 5TH AMENDMENT BILL OF RIGHTS HERE! Our Constitutional Rights steam rolled and ignored by the SCOTUS because we can't physically exclude the FHFA and UST employees from the physical property?):
"Here, Barrett's derivative takings claims allege that the net worth sweep constituted a regulatory taking because it deprived the Enterprises of "all economically beneficial uses" of their net worth. *1303 J.A. 464 (¶ 181); J.A. 465 (¶ 190). As a matter of law, Barrett fails to state a claim upon which relief may be granted. Supreme Court case law has long held that the right to exclude is an essential element of property ownership. See Loretto, 458 U.S. at 435-36, 102 S.Ct. 3164 ("The power to exclude has traditionally been considered one of the most treasured strands in an owner's bundle of property rights." (citation omitted)). And our case law is clear that regulated financial entities lack the fundamental right to exclude the government from their property when the government could place the entities into conservatorship or receivership. See Cal. Hous. Sec., Inc. v. United States, 959 F.2d 955, 958 (Fed. Cir. 1992) ("Saratoga lacked the fundamental right to exclude the government from its property at those times when the government could legally impose a conservatorship or receivership on Saratoga."); see also Golden Pac. Bancorp. v. United States, 15 F.3d 1066, 1074 (Fed. Cir. 1994) ("At those times when the Comptroller could legally inspect the Bank or place it in receivership, the Bank ... was unable to exclude the government from its property.")."
2. This seems a little bizarre as well, the opinion says when HERA was passed we lost our rights to exclude the federal government from our Economic Rights (wouldn't that be a Taking?):
"Because the Enterprises lacked the right to exclude the government from their net worth after the passage of HERA, and especially after the imposition of the conservatorship, they had no investment-backed expectation that the FHFA would protect their interests and not dilute their equity. We find, accordingly, that the Claims Court erred in failing to dismiss Barrett's derivative takings claim under Rule of the Court of Federal Claims 12(b)(6). While this logic applies equally to Barrett's derivatively pled illegal exaction claims, there are additional reasons his illegal exaction claim fails, which we address below."
"As of at least 2008, then, the Enterprises lost their right to exclude the government from their property, including their net worth. They also lost the right to complain if and when the FHFA chose to elevate its interests, and the interests of the public, above the interests of the Enterprises. Without this right to exclude, the Enterprises lack any cognizable property interest on which Barrett may base a derivative Fifth Amendment takings claim. See Golden Pac., 15 F.3d at 1074. This conclusion is bolstered, moreover, by the fact that the Enterprises consented to the conservatorship, and consented to one where the conservator had extremely broad statutory powers. Because the Enterprises lacked the right to exclude the government from their net worth after the passage of HERA, and especially after the imposition of the conservatorship, they had no investment-backed expectation that the FHFA would protect their interests and not dilute their equity. We find, accordingly, that the Claims Court erred in failing to dismiss Barrett's derivative takings claim under Rule of the Court of Federal Claims 12(b)(6). While this logic applies equally to Barrett's derivatively pled illegal exaction claims, there are additional reasons his illegal exaction claim fails, which we address below.[14]"
You know, I just roll my eyes upward in disbelief that the USSCT can let the biggest theft in US Corporate History go on right in front of everyone and deny the Plaintiff Shareholders their day in court on the issue!
The USSCT denied the Writ this morning (they only take like 85 cases per year) therefore the final decision, a Court of Federal Claims 3 Judge Panel ruling that as I recall was 2-1 in favor of dismissing the Plaintiff Shareholders Takings Case based on the fact that the Plaintiff Shareholders have no property rights during the CONservatorships according to one or two posters that read the opinion when it came out last year I believe.
If the SCOTUS grants the Petition and the lower court ruling is invalidated after the SCOTUS hears oral arguments and the remedy is to give Plaintiff Shareholders a trial on the Takings Clause issue, it only means that we will finally have our day in court, nothing more, nothing less.
If the SCOTUS denies the Petition then the lower court ruling stands and somewhere Karl Marx will be smiling thinking, "Amerika, my kinda country !". And only 100 years after the birth of the Union of Soviet Socialist Republics!
Meanwhile, we continue to rebuild capital at least on paper.
The Appropriations Process is one tool that the Congress can use to reign in and control federal agencies (its unavailable for the FHFA as they are funded by the GSES and fhlbb banks) I thought that I heard one of the reasons that the current speaker of the house couldn't get nominated, according to Senator Pat Haggerty is that the last and previous budgets were voted on with minutes to spare to read a 4,000 page bill. I also suspect that the various committees in Congress did not have a chance to scrutinize the budgets of each of these 100's of federal agencies that control our lives as Americans much more than Congress does.
On the current practice of letting the federal agencies have a legislative branch (rule making authority), executive branch (enforcement of the rules), and Judicial Branch (tribunals within the agency to interpret the rules or administrative law judges), James Madison wanted the first (or second) Congress to include a Nondelegation Clause to the US Constitution, it passed the House but died in a closed door Senate Committee meeting.
Here's what James Madison said about the delegation of power from one branch to another:
" As James Madison wrote in Feder-
alist No. 47,
The 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. Were the federal Constitution, therefore, really chargeable
with the accumulation of powers, or with a mixture of powers, having a
dangerous tendency to such an accumulation, no further arguments would
be necessary to inspire a universal reprobation of the system.187
Or in the words of Montesquieu, an influential theorist for the Founding gener-
ation,188 “When the legislative and executive powers are united in the same per-
son, or in the same body of magistrates, there can be no liberty.”189
In light of statements such as these, could it possibly have been understood
by anyone at the Founding that the Constitution imposed no limits on what
Congress could delegate to the Executive? This separation-of-powers sentiment,
widely shared in the Founding era, also included at least an implicature when-
ever expressed. Listeners in the Founding era would likely have understood such
statements to imply that Congress could not delegate its legislative power."
I. Wurman, Nondelegation at the Founding, 130 Yale L. J. 1526 (2021)
I think another more glaring issue preventing recap and release is that the federal government decision makers are unsure of whether or not:
1. Did the federal government take the Plaintiff Shareholders property when it implemented the Net Worth Swipe? (Could be decided as soon as tomorrow with a "HaHa Shareholders YOU HAVE NO PROPERTY RIGHTS DURING THE CONSERVATORSHIPS AND UNCLE SUGGY CAN TAKE AS LONG AS HE WANTS TO EXIT THE CONSERVATORSHIPS GIVEN THE FHFA'S ABILITY TO DO WHATEVER IS IN ITS BEST INTERESTS - Taking Clause Petition for a Writ of Certerrori DENIED!)
2. Did the FHFA and Freddie Mac and Fannie Mae breach the implied contract to shareholders during the CONservatorships and what if any damages will be assessed by the court?
3. What remedy if any will the courts impose on the SOP issue of the insulated FHFA Director, Mel "chase me some skirt around the office" Watt?
4. Is the FHFA double insulated from the US Congress by having its federal budget bypass the Congressional Appropriations Oversight Process? What remedy if any is available to parties challenging past FHFA decisions like the NWS?
5. Did the FHFA and the UST decide a Major Question of Economic and Political Importance by Nationalizing the 2 linchpins of the US Secondary Mortgage Market? What remedy if any is available?
6. The issues in the Kelley lawsuit need to be resolved.
As TH pointed out, unfortunately due to the $300B transfer of CASH to the US Treasury from the GSES balance sheets from 2012 to 2019 (in return for NOTHING!), plus MC'S crazy 4.5% Tier 1 Capital Requirement, an organic recap is years away.
Unless the federal government is willing to totally reverse the NWS and concede what they did was wrong, I just don't see the Shareholders letting the federal government overreach here off the hook.
And so far the federal government has given ZERO suggestions of a Compromise. And even if they did, how would you get the Shareholders on board?
Look we're all looking for the big game kill here and that's to reverse the 3rd Amendment Net Worth Sweep. The nondelegation doctrine seems to be the latest possible focus of attention with the Supremes. Last Summer, SCOTUS, WV v EPA was decided in an attempt to reign in the out of control actions of a federal agency through application of the major questions doctrine.
Have you or any other Shareholder considered challenging the NWS as a violation of the Major Questions Doctrine?
Here's some good reading on the Nondelegation Doctrine from Justice Gorsuch's opinion in WV v EPA: Footnote 6: "6 In the course of its argument, the dissent leans heavily on two recent
academic articles. Post, at 29. But if a battle of law reviews were the
order of the day, it might be worth adding to the reading list. See, e.g.,
I. Wurman, Nondelegation at the Founding, 130 Yale L. J. 1490, 1493–
1494 (2021); D. Candeub, Preference and Administrative Law, 72 Admin.
L. Rev. 607, 614–628 (2020); P. Hamburger, Delegation or Divesting?,
115 Nw. L. Rev. Online 88, 91–110 (2020); M. McConnell, The President
Who Would Not Be King 326–335 (2020); A. Gordon, Nondelegation, 12
N. Y. U. J. L. & Liberty 718, 719 (2019); R. Cass, Delegation Reconsid-
ered: A Delegation Doctrine for the Modern Administrative State, 40
Harv. J. L. & Pub. Pol’y 147, 155–161 (2017); G. Lawson & G. Seidman,
“A Great Power of Attorney:” Understanding the Fiduciary Constitution
104–129 (2017); P. Hamburger, Is Administrative Law Unlawful? 377–
402 (2014); L. Alexander & S. Prakash, Reports of the Nondelegation
Doctrine’s Death are Greatly Exaggerated, 70 U. Chi. L. Rev. 1297,
1298–1299 (2003); G. Lawson, Delegation and Original Meaning, 88 Va.
L. Rev. 327, 335–343 (2002); D. Schoenbrod, The Delegation Doctrine:
Could the Court Give It Substance? 83 Mich. L. Rev. 1223, 1252–1255,
1260–1261 (1985); see generally P. Wallison & J. Yoo, The Administra-
tive State Before the Supreme Court: Perspectives on the Nondelegation
Doctrine (2022)."
I don't know about predicting the actual outcome of damages IF they agree to hear the Takings Case.
Can you cite one case where a federal government agency conservator (e.g., RTC or FDIC from the 80's) during a conservatorship of corporations has had to pay the fair market value of company stock on a given trading day?
Would the fact that Susan McFarland, the CFO of Fannie Mae informed the federal government in internal nonpublic meetings that the "golden years are ahead and the $50B DTA could be reversed", is relevant?
Great point and I still believe that given the federal government overreach here, there could be some room for more! We'll have plenty of time, as an exit is unlikely until all litigation involving the Net Worth Swipe (and the 4th Amendment?) has ended and all legal challenges are exhausted.
"I am . . . a mortal enemy to arbitrary government and unlimited power. I am naturally very jealous for the rights and liberties of my country; and the least appearance of an encroachment on those invaluable privileges is apt to make my blood boil exceedingly."
Benjamin Franklin
HeeeeHeeee! Or down to $0.20 if the SCOTUS denies the Petitioners request for a Writ of Certerrori. !
Don't worry our benevolent 'dear leaders' in Gubmint will protect our private property, right, if the SCOTUS denies the Petition! !
"The Court will release an order list at 9:30 a.m. on Monday, January 9."
https://www.supremecourt.gov/
But heads up, "The vast majority of cases filed in the Supreme Court are disposed of summarily by unsigned orders. Such an order will, for example, deny a petition for certiorari without comment. Regularly scheduled lists of orders are issued on each Monday that the Court sits, but "miscellaneous" orders may be issued in individual cases at any time. Scheduled order lists are posted on this Website on the day of their issuance, while miscellaneous orders are posted on the day of issuance or the next day.
Caution: These electronic orders may contain computer-generated errors or other deviations from the official printed versions. Moreover, all order lists and miscellaneous orders are replaced within a few months by paginated versions of them in a preliminary print of the United States Reports, and one year after the issuance of the preliminary print by the final version of the orders in a U. S. Reports bound volume. In case of discrepancies between the print and electronic versions of orders, the print version controls. In case of discrepancies between order lists or miscellaneous orders and any later official version of them, the later version controls."
https://www.supremecourt.gov/orders/ordersofthecourt
Are you feeling lucky or afraid or do you just not care at this point?
But for the massive delegation of power by Congress to the FHFA in HERA (i.e., the FHFA can exercise its power so that it's in the best interests of the FHFA or the public it serves!) Demarco never would have been able to give away all the shareholders economic rights in return for nothing to the US Treasury. It takes two to tango baby, just ask my smoking hot Ukrainian American girlfriend !
Add the fact that the US Congress has zero control over FHFA's budget and you get unchecked from power agency actions like DeMarco's Net Worth Swipe.
Little wonder Americans confidence in the US Government is polling at all time lows.
The USSCT can and should reign in the 4th branch of government to prevent other American Citizens from experiencing this type of abusive and coercive governmental power from agency overreach.
Todays WSJ, Philip Hamburger (Columbia Law Professor and CEO of NCLA) on the danger of the Supreme Court allowing a concentration of power to be exercised by Unelected Bureaucrats (like DeMarco) in federal agencies:
"What makes this especially dangerous is that administrative agencies, not only Congress, now exercise this expansive legislative power. These agencies are in the hands of unelected bureaucrats, who can be unleashed -- or restrained -- by the president."
"In the 20th century, the Supreme Court simultaneously expanded Congress's legislative powers and allowed them to be exercised by administrative agencies. The high court thereby loosed administrative agencies to exercise immense legislative power. Little could be more destabilizing."
What are the limits of the FHFA's power if it can exercise power limited by only "what's in the FHFA'S best interests or the public it serves"?
The GSES aren't going away. Eventually some people in government that possess the appropriate power will finally realize that the government can't pull the type of shenanigans it pulled here and some type of resolution will occur.
What that looks like is anyone's guess, but a favorable shareholder verdict could finally get the government to the negotiation table.
In Collins, we won unanimously on the Constitutional Seperation of Powers issue (the Insulated FHFA Director) but lost on the statutory claim: "Instead, we conclude only that under the terms of the Recovery Act, the FHFA did not exceed its authority as a conservator, and therefore the anti-injunction clause bars the shareholders’ statutory claim.
III
We now consider the shareholders’ claim that the statutory restriction on the President’s power to remove the FHFA Director, 12 U. S. C. §4512(b)(2), is unconstitutional."
So if the current round of litigation is unfruitful we could initiate another legal claim based on the Major Questions Doctrine.
Let's see what they do with the Takings Petition for a Writ of Certiorari, maybe on the Order List as soon as next Monday.
"In most cases, the disposition of a petition discussed at a particular Conference will be announced in an order list that is issued at 9:30 am on the Monday after that Conference."
https://www.supremecourt.gov/case_documents.aspx
Congress granted the FHFA the power to enter into the Net Worth Swipe in the 2008 HERA to give the FHFA plenty of room to manage the great financial crisis including the ability to act "in the best interests of the FHFA or the public it serves."
Does that mean that it's okay for Unelected Bureaucrats like DeMarco to take all the economic rights of the shareholders? We'll find out shortly whether or not the USSCT will consider this question.
Meanwhile, do you think that this is an example of a federal agency (aka the Administrative State/4th Branch of Government) engaging in overreach?
From todays WSJ: "One peril of a large administrative state is the mischief agencies can get up to when no one is watching. Witness the overreach of the Agriculture Department, which expanded food-stamp benefits by evading the process for determining benefits and end-running Congressional review.
The behavior has earned USDA two scoldings this year from the Government Accountability Office. The latest report in December thwacked the department for "key decisions [that] did not fully meet standards for economic analysis" as well as "insufficient analysis of the effects of decisions" and "lack of documentation."
The sneak started in 2021 when USDA rejiggered the Thrifty Food Plan, a metric the government uses to determine foods that make up a healthy nutritional basket. Agriculture uses that information, as well as food prices and inflation, to set benefits for the Supplemental Nutrition Assistance Program (known as SNAP, or food stamps).
Congress controls the purse and reviews benefits for social safety-net programs including food stamps. Since the 1970s, SNAP benefits and the Thrifty Food Plan have been adjusted annually for inflation. But in 2020 USDA extended a special 15% emergency increase in response to the pandemic and shortages and price hikes for certain foods owing to shortages.
The pandemic increase was set to expire in September 2021, so the USDA hurried to push through its 2021 increase on an abbreviated time frame, increasing SNAP benefits by an average of 21%. The result skipped over procedural safeguards, evaded Congressional review and produced its increases without a project plan or program manager. According to a review by Angela Rachidi at the American Enterprise Institute, the Congressional Budget Office estimates the 2021 increase in the Thrifty Food Plan added $200 billion to the budget baseline over 10 years.
In its first review of USDA, the GAO skewered Agriculture's process for having violated the Congressional Review Act, noting that the "2021 [Thrifty Food Plan] meets the definition of a rule under the [Congressional Review Act] and no CRA exception applies. Therefore, the 2021 TFP is subject to the requirement that it be submitted to Congress." GAO's second report says "officials made this update without key project management and quality assurance practices in place."
Abuse of process doesn't get much clearer than that. The GAO review won't unwind the increase, which requires action by the USDA. But the GAO report should resonate with taxpayers who don't like to see the politicization of a process meant to provide nutrition to those in need, not act as a vehicle for partisan agency staffers to impose their agenda without Congressional approval.
All of this undermines transparency and accountability for a program that provided food stamps to some 41 million people in 2021."
https://www.gao.gov/products/gao-23-105450
https://www.aei.org/poverty-studies/president-bidens-usda-improperly-increased-snap-by-billions-according-to-the-gao/
I think all (except for skirt chasing Mel Watt !) FHFA Directors and Gubmint people are going to be safe than sorry by over capitalizing all financial intermediaries for the next several years at least.
Despite the "living will" bs, you know Uncle Suggy will save the day if the backbone of the financial intermediaries breaks again.
No one typically sees these pending financial disasters coming (but they present great buying opportunities !)
The ONLY powers that belong to the federal government are those explicitly listed (enumerated) in the US Constitution, ALL the rest (e.g., Health and Safety) are RESERVED for the states. That's basically what last summers controversial decision was all about.
Fannie Mae was created originally as a federal government agency by FDR and privatized by LBJ and ironically it was during BO'S term on August 17 2012 they were turned back into a government agency through a Defacto Nationalization.
When I worked at Fannie Mae between 1988 and 1993, they were loaded with leaders' from your favorite side of the aisle and as private corporations they used their financial and political might willingly (they neutered DeMarco's power over at ofheo) and sometimes that backfires.
There's two opposing philosophies in interpreting the meaning of the US Constitution, one is textualism as demonstrated by the majority last summer and the other is that the US Constitution is a "living document" that bends with the times.
Guess which party likes the later?
Since 1968 there has always been an implicit market realized government guaranty on Fannie Mae and Freddie Mac.
In 2013 & 2014, despite various committee meetings, proposed bills, and debates in the US Congress no better proposal had developed, likely because it's too uncertain.
DeMarco and the UST Nationalized the GSES on August 17 2012, is that what Congress instructed DeMarco to do?
The most effective way would be for Fitch, Moodys, and S&P bond rating agencies to recognize the defacto nationalization.
There's approximately $100B capital in a 1st Loss Position cushion currently and still growing organically plus credit loss reserves as well as incoming guarantee fee payments when the inevitable down cycle hits in the US residential housing market to absorb potential losses.
So it's unlikely that the entire $7+T in MBS liabilities would be recognized on the federal government balance sheet but as I recall CBO recognizes it's a risk to the federal government and US taxpayers.
I think EnBanc Panel hearings are only heard once a certain number of Judges approve it and after a 3 Judge Appealate Panel hears it. In the first round of Litigation on the insulated FHFA Director issue I believe that is what happened.
So who gives one quarter of our federal government (don't forget the 4th Branch !) their "marching orders"?
I'm trying to save our Republic here (or our Nationalized shares) !
I've heard more than one skeptic say it's the Federalist Society, lately the left believes it's the high dollar donors at the nonprofit historical supreme court society, who allegedly via a 30 to 50 year plot, loaded the USSCT with "their people" to simply overturn a case that has contributed to dividing the nation since 1972.
Are you sure that it's not just peoples upset reactions to unfavorable rulings?
Major Questions of Economic and Political Importance should be decided by the PEOPLES REPRESENTATIVES not UNELECTED BURAUCRATS in DC. That's all the USSCT said, nothing more, nothing less.
WV v EPA just says that the US Congress is in charge of deciding what fuels all the nations utility producers use, NOT a federal agency that has Unelected Bureaucrats running it.
Same like the "controversial" abortion case last Summer, except that there is no "penumbra of Rights" emanating from the US Constitution that the US Supreme Court gets to choose, it's up to your ELECTED STATE LEGISLATORS TO DECIDE on the health and safety of its residents.
Remember the "Future of the Secondary Mortgage Market/GSES" Senate Banking Committee hearings and the corresponding House Committee hearings in 2013/4?
No bills that may have come out of those Committees passed as law, right?
Who wants to sponsor a bill for destroying/imploding the US Secondary Mortgage Market and possibly creating a new Financial Crisis?
In essence the USSCT would be saying that the US Congress gave FHFA "clear Congressional Authority", to NATIONALIZE 2 PRIVATE CORPORATIONS THAT CONTROL 60%+ OF THE US SECONDARY MORTGAGE MARKET.
That type of Major Economic and Political Question is for our ELECTED REPRESENTATIVES not UNELECTED BURAUCRATS ED DEMARCO.
But, I was completely stunned by Collins, so it would just be par for the course !
-----
Check out this Congressional Research Services report to Congress from the CRS's Legislative Assistant (11-2-22) - Notice her recommendation to the US Congress that the Chevron Doctrine is not always the go to pick by the Supremes:
The Major Questions Doctrine
In several recent decisions, the Court has placed increasing
emphasis on the major questions doctrine. First, in Alabama
Association of Realtors v. HHS, the Court explained that the
CDC’s eviction moratorium was of major national
significance and required a clear statutory basis because the
agency’s action covered 80% or more of the nation; created
an estimated economic impact of tens of billions of dollars;
and interfered with the landlord-tenant relationship, which
the Court explained is “the particular domain of state law.”
Then, in National Federation of Independent Business v.
OSHA, the Court considered OSHA’s emergency temporary
standard to be of major economic and political significance
because, in its estimation, it seriously intruded upon the
lives of more than 80 million people.
Most recently, the Court’s decision in West Virginia v. EPA
marked the first express reference to the major questions
doctrine in a majority opinion of the Supreme Court. In
West Virginia, the Court rejected EPA’s reliance on a
statutory provision that, in the Court’s view, was a
“previously little-used backwater.” The Court concluded
that it was unlikely Congress would task EPA with
“balancing the many vital considerations of national policy
implicated in deciding how Americans will get their
energy,” such as deciding the optimal mix of energy
sources nationwide over time and identifying an acceptable
level of energy price increases. For more information on the
case, see CRS Legal Sidebar LSB10791, Supreme Court
Addresses Major Questions Doctrine and EPA’s Regulation
of Greenhouse Gas Emissions, by Kate R. Bowers.
Relationship to the Chevron Doctrine
The major questions doctrine’s precise relationship to the
Chevron doctrine is unclear. The Chevron doctrine, which
the Court established in Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984),
governs judicial review of an agency’s interpretation of a
statute it administers. If Chevron applies, a court will
typically engage in a two-step analysis to determine if it
must defer to an agency’s statutory interpretation. At step
one, the court asks whether the statute directly addresses the
precise issue before the court. If the statute is ambiguous or
silent in that respect, the court must proceed to step two,
which instructs the court generally to defer to the agency’s
reasonable interpretation.
In some cases, the Court has treated the major questions
doctrine as an exception to the Chevron doctrine. In those
cases, when an agency’s interpretation of an ambiguous
statute concerns an issue of vast economic and political
significance, the Court has invoked the major questions
doctrine to deny the agency the deference traditionally
accorded under Chevron. When the Court refuses to defer
to an agency’s interpretation of a major question, it has
often (but not always) rejected the agency’s position. At
times, the Court has applied the major questions doctrine at
step one of Chevron, concluding that Congress did not
authorize the agency to regulate the major question at issue.
The Court has also invoked the major questions doctrine at
step two, determining that the agency’s interpretation was
unreasonable because Congress did not clearly give it such
authority. The Court has even used the doctrine as a reason
to reject engaging in the Chevron two-step analysis
altogether.
The Court, therefore, has arguably applied the major
questions doctrine in the Chevron context in an unclear, ad
hoc manner. In its three most recent cases applying the
major questions doctrine, the Court did not discuss the
Chevron framework, possibly signaling that the major
questions doctrine is an independent principle of statutory
interpretation focused on ensuring Congress bears the
responsibility for confronting questions of major national
significance. This approach also appears to be consistent
with other recent cases in which the Court has not applied
or referred to the Chevron doctrine in reviewing agency
actions. See, e.g., Am. Hosp. Ass’n v. Becerra, 142 S. Ct.
1896 (2022). That silence leaves unanswered questions
about how to determine which doctrine applies or whether
courts should undertake a major questions inquiry prior to
or as part of their Chevron analyses. These questions will
likely be important to the lower courts in challenges to
agency action in the near future.
Considerations for Congress
Under the Court’s formulation of the major questions
doctrine, an agency will lack the ability to determine
authoritatively a major question if it lacks “clear
congressional authorization” to do so. Therefore, if
Congress wants an agency to decide issues in an area courts
would likely consider to be of vast economic and political
significance, Congress should clearly specify that intention
in the relevant underlying statute as opposed to relying on
vague or imprecise statutory language. This task may be
difficult at times, given the lack of clear guidance from the
Court on what can be considered a “major” question or
clear congressional authorization. The Court’s
jurisprudence also leaves open the question of how, or even
whether, Congress may grant agencies the authority to act
to address major issues in the future that Congress did not
anticipate when it enacted a statute.
Additionally, the Supreme Court has not specified whether
material other than the text of an enacted statute could
constitute clear congressional authorization. The Court in
West Virginia looked beyond the statutory text in its
analysis of EPA’s authority, including by considering that
Congress “conspicuously and repeatedly declined to enact”
a program similar to aspects of the challenged regulation.
Even when a statutory delegation of authority over a major
economic and political question is clear, courts may find
that the underlying statute raises other problems. For
example, in his concurrence in the OSHA case, Justice
Gorsuch argued that even had Congress clearly authorized
the vaccination mandate at issue in that case, that delegation
would have probably violated the non-delegation
doctrine—the separation-of-powers principle that limits
Congress’s ability to confer legislative authority on
entities—because the statute contained no meaningful
restrictions on the agency’s regulatory power and, per the
agency, conferred near-unlimited discretion on the agency.