I suspected that Waizee amended complaint would be a nothing burger because Hamish Hume probably didnt bother to read my e-mail to him (if he did he didnt bother to respond) giving him my research for novel legal theories attacking the Treasury and avoiding the FHFA director. Too bad. Next up is Kelly on March 6. The Attorneys did receive the research. Hopefully some of these theories were accepted and new arguments are made. Otherwise it is time to get back to working on filing ourselves in district courts.

Thanks. Sounds like sarcasm. Why would I care about all the other companies? Not sure what your point is. Congress didnt write charters as a matter of federal law for all those companies. Its my opinion that all of those companies should have gone bankrupt. The moral hazard created by bailing out private companies and then having zero criminal consequences and settling for pennies on the dollar in civil settlements is just wrong. Besides I wish Treasury would have bailed out FNMA by purchasing securities and obligations. Instead they nationalized them. Again not sure what your point was.

Might want to point out that the $189 billion commitment fee (warrants and LP) is prohibited by the Charter Act. Congress only authorized Purchases of GSE securities and obligations. No loans.

Thanks for the input. I see that my wording was poor. We are not going back to 1938. What I am saying is that if it is found that the actions of Treasury since 2008 would require that the GSEs be consolidated on the nations balance sheets as required by FASAB, then that would be an actual takings requiring Treasury to also include the mbs liability (trillions) on the nations balance sheet. The result would be that the Treasury’s actions recreated FNMA as an agency of the united states as they were created in 1938. This was not intended by Congress when they amended the charter act under HERA. So this is a major question doctrine case, a constitutional debt clause case, a takings case, and a major questions case. Treasury was told to buy GSE stuff in 2008-2009 to help them out. Not take them over and nationalize them violating all the accounting and budgeting laws of the United States.

I’m of the opinion thanks to your valuable insight that a takings case will pay more than a drop of common share prices similar to AIG because you have shown the the key to unwinding the whole kit and kaboodle. I have been working diligently on developing a great new takings claim based on the Budget and Accounting Procedures Act of 1950 that created the GAO, and the CFO act of 1990 that created FASAB. Forget about HERA and the FHFA. This is about Treasury violating the above two acts, the charter act and the 5th and 14th amendments, and while Im at it throw in major questions doctrine and separation of powers doctrine. All because Treasury abused their power and created a 200 billion commitment fee with no Congressional authority. They decided to control the entities through the SPSPA, and gave themselves greater than 50% ownership. But oops they forgot to consolidate the entities onto the balance sheet for 15 years. If I am successful, the taxpayers get everything, all equity, all the assets too. We are going all the way back to 1938. I dont think the takings will be limited to an AIG style ruling. But there wont be anything because if I am right then the SPSPA will disappear. Figure out the mess afterwords.

I suggest you go read through my posts to see just such new claims and think to yourself, wouldnt it be cool if some of these legal theories just happened to pop up in some of the cases you mentioned. Not saying they will, but wont be surprised if they do. If they dont it wont be for a lack of trying.

A very valid concern. But we have to make an effort. The Charter was amended in 2008. Treasury tells us in the SPSPA that their authority to provide a commitment of 200 billion arrises from sec 304 of the amended charter act. It is up to a judge to decide if sec 304 allows the commitment fee to stay. Should a judge find the Charter Act to not allow such a fee arrangement, then relief sought is to make null and void the SPSPA in its entirety. As if it never happened and reverse all the actions back to GSEs. Simply stated we would ask that the terms of the agreement be enforced. All dividends paid including the 10% go back to the companies balance sheets. Should the Courts agree with Treasury that Congress allowed the commitment fee then the theory anticipates that constitutional claims of separation of powers, major questions doctrine, and 14th amendment claims would be made. Based on the 14th amendment debt clause and FASB the theory would ask that the GSEs be consolidated as federal entities. This would then require all equity to stop trading, US taxpayers would own all MBS products outright including all the 5 trillion in assets. Of course a takings will then have occurred and the entire enterprise value would need to be paid back to the equity holders. The US gov would need to decide whether or not they want to go back to 1938 or keep the GSEs private companies. This is what a major questions doctrine is all about. Treasury actions could amount to a solution that only Congress could have made.

Thank you Robert. With luck some of these arguments just might turn up in upcoming filings in existing cases. Probability is low. But am waiting till mid March to judge. Just about every counter argument can be made by posters here with different backgrounds, agendas and biases. I take them all in and value all of them. It really has led me to refine my own legal arguments around them. Special shoutout to kt, who provides a wealth of counterarguments weekly and has led me to the public debt 14th amendment arguments based on fasb.

Thank you mang! This ruling illustrates what I have been claiming all along. The FHFA is not the issue. The courts are correct. Non delegation doesnt apply to the actions of the conservator. It has and still does apply to the actions of Treasury! I wish posters would understand that Treasury took it upon themselves without the authorization of Congress to provide a 200 billion commitment fee on there own. It is Congress job to provide a commitment fee. Congress only ever gave permission to purchase GSE obligations and or securities. They could have spent 200 billion on buying MBS if they wanted. That 200 billion would have instantly enabled the ending of the conservatorship. Treasury could then sell the MBS and apply the proceeds to deficit reduction as required by their congressional authorization. You and everyone else have been led to the slaughter by plaintiffs attorneys by not accusing the correct defendants.

It will be a lot harder to make that argument against FHFA than it would if you focused your mental energies on the fact that Treasury provided 200 billion in funding as a “commitment fee” without any Congressional authorization or the fact that a “commitment fee” is prohibited by the plain language words of Congress when they amended the charter act. This is where you should be arguing separation of powers/ major doctrine, 14th amendment. FASB generally requires an entity that meets one of three conditions to be consolidated: Gov funding, gov control, and greater than 50% ownership. GSEs meet all three. Whitehouse.gov says the 200 billion commitment is in the appropriations. SPSPA states Treasury has non regulatory control over the BOD/FHFA-C. Contract requires prior written approval of Treasury no less than 10 times in the agreement. Read the entire contract. Obviously Treasury meets the ownership requirement. Should the Court rule the 200 billion commitment legal, then the obvious conclusion is that Treasury has violated the constitution by repudiating the US debt by not consolidating the entities liabilities of 5 trillion. Arguing against the actions of the FHFA has been a colossal waste of time and money. It has always been the actions of the Treasury that caused the injury.

The NWS is not an issue. The SPSPA itself is just a symptom of the real violation of statute and Constitution. The questions that no one has yet to ask is. Under what congressional authority did Treasury increase the tax payer debt to provide the $200 billion funding commitment? Treasury says in the SPSPA that it was authorized by section 304 of the amended Charter Act. It was not. Had treasury purchased 200 billion of FNMA debt obligations, MBS, preferred stock or common stock, then they would be correct. They did not! So there remains a statutory violation and 2 constitutional violations, separation of power/major questions doctrine and public debt clause 14th amendment violation. I am doing what I can to move these claims foreword, hopefully you will as well.

You are correct. Go reread my post. I said wazee can amend their claim. They have until Feb 27 to do so. Kelly case needs to respond to motion to dismiss by March 6. Is the kelly case allowed to make an amended complaint to introduce new claims? I have no idea. Maybe you know? Both cases are in federal claims court which can only adjudicate tucker act claims. Thus I said new claims in district court which would be new cases. Thank you for backing me up.

Im hoping that we will see an amended complaint in the wazee case and new claims in the Kelly case for takings that incorporate the recent Supreme Court ruling that FHFA director is subservient to POTUS. This new fact, should render the reasoning the appeals court used to dismiss derivative claims based on 3rd party reasoning moot. There is no longer an independent conservator that steps in the shoes of the BOD. It is the executive branch 1 step removed from the commander and chief. Dont discount these cases, there is still plenty of life left especially the Kelly case as tolling of SOL means they can still introduce novel claims in the first instance. Meaning the SPSPA itself, not to mention new Constitutional claims in district court.

They say and who cares rule the world. That’s what grandma said.

I hear and mostly agree with you in your assessment. The reason I believe that all the lawsuits have failed is relatively simple. An analogy to the GSE lawsuits that illustrate this is as follows. In many states, the courts have ruled and applied “the presumption of correctness” to the tax assessor. If the town you live in, reassesses all the property in the town. You may find yourself with an assessment you don’t think is correct. So what can you do? You can try to appeal your assessment before the county gov. After you fail you can then appeal to the tax court. In almost all cases your appeal will be dismissed. Why, because the Courts have already ruled that the tax assessor is an expert and presumed to be correct. This is established law in most places for a century. For FNMA shareholders, the director of FHFA is the tax assessor, HERA is a codified presumption of correctness. He can do mostly anything he wants and no court can question it. The failure here is not the judges or that the fix is in. If anything the fix was commited by the plaintiffs attorneys. Why do I say this? Because from the very beginning, 2008 till now, the actions of the Sec of Treasury could have been challenged at every step of the way without ever naming FHFA as defendant with its presumption of correctness that cant be questioned. Why did every lawsuit challenge the party that had no ability to provide the funding. Classic mis-direction play. Its been a clusterf..k since day one with the plaintiffs.

Any idea who the attorneys are for Wazey? Prior success breeds new confidence if you know what I mean.

Big shout out to KT for introducing me to SFFAS No 47. Everyone should read the document found here: https://files.fasab.gov/pdffiles/handbook_sffas_47.pdf

This doc may become the basis of new constitutional claims.

Thank you Neo,

Your post illustrates and articulates the reason I and hopefully other courageous shareholders and citizens will file new claims against the Treasury. Hopefully some of the following claims will find their way into existing litigation as well.

Direct claims for takings/illegal exaction based on the prohibition of the initial commitment fee and periodic commitment fees in the form of warrants and liquidation Preference in the Charter Act. Now that US Supreme court has ruled that FHFA director is subservient to POTUS, an attempt to challenge the rulings that shareholder claims are derivative based on third party reasoning should be made based on self dealing.

Treasury’s action in creating the commitment fee was not authorized by the Charter amendments under HERA. Therefore the liquidation preference represents an unlawful appropriation, requiring constitutional claims for separation of government, major questions doctrine, and most importantly the public debt clause, section 4 of the 14th amendment. Treasury has failed to consolidate the FHFA-C and its wards onto the nations balance sheet after 15 years of nationalizing the twins. This represents an unconstitutional repudiation of the nations debt if the commitment fee in the SPSPA is allowed to stand.

For these reasons all of the actions will eventually be reversed. Until that day, the money will be used for political purposes.

Thank You. You are correct. Mike Kelly can put forward due to tolling of SOL the claim that the initial comment fee was not legal in the first instance. Can you Pm me any contact info on the new Counsel or point me in the right direction?

If you would like to pm me your contact info, I would like to explore the constitutional claim of separation of powers. Major questions doctrine, and explore whether the Treasury unconstitutionality repudiated the debt by not consolidating FHFA-C and its wards after over a decade of owning more than 50 percent of the entities violating the public debt clause and the 14th amendment.

I am sorry that you are having issues with your posts. If you have made posts about SOL I thank you for backing me up on that for any shareholders thinking of legal action. Standing is important to get right.

I addressed the statute of limitations on a possible claim on Jan 28 in post #746410.
And additional posts since.
I encourage you and others to read through my theory and give any constructive criticism of my proposal.

Thanks and GLTA.

Thank you FOF and Rodney for providing copies of Washington Federal and Kelley. After a brief read through of the claims, it seems that neither addresses the requirements and prohibitions on Treasury and FHFA in the Charter Act. Washington Federal came so close but didnt make the connection. So unless someone can point me to a prior lawsuit that makes my claims of illegal commitment fee, I believe the legal theory is novel. It seems there are no claims based solely on Treasury over-reach and instead all litigate against the imposition of the conservatorship.

I also believe that “The doctrine of continuing claims” applies to the 6 year statute of limitations if any shareholders are considering their own legal actions. This means that even though the initial commitment fee was enacted in 2008 and continues to this day, the 3rd amendment, and 4th amendment effectively create new claims because each act introduces new forms of damage” I’m wondering if I should set damages based on calculating the change in value of my fraction of 20% of total shares times the warrant price of 0.000001 per share and my fraction of 0.1% of total shares after SPS conversion to commons. Plus court costs of course.

Guido, Govforprofit,

I am just a concerned shareholder and US citizen. I can't give legal advice, these are just my opinions and I may very well be wrong. But I am trying. I am encouraged that folks are thinking about getting engaged to try to protect their property. Please search through my posts to find my opinion on a procedure we can all try with the little tucker act. If you know or have a lawyer, running it by them is a wise choice.

Man with no name,

I am sorry you had a post removed. I value your knowledge and the knowledge of everyone else here. Our posts all contribute in different ways.

FOF

I don't think shareholders should continue to focus on the NWS or FHFA and the conservatorship. The issues arose from the actions of Timothy Geitner as Treasury Secretary. FHFA could only work with the money in the form of funding that Treasury made available to FHFA. The Supremes have foreclosed on this avenue.

Had Treasury followed the amended Charter Act. The Treasury would have purchased $100 billion of Senior Preferred with a 10% dividend or whatever rate they chose, with terms and conditions set by the Treasury to protect taxpayer yada yada. The terms could have been whatever, but the $100 billion dollars would have been deposited in FNMAs account because it was a PURCHASE. They could have then purchased an additional $100 billion or however much they wanted to spend before the temporary authority expired with terms and conditions set by the Treasurer Sec. It didn't have to be what we call Seniors, He could have purchased commons, preferred, obligations, or MBS. The Treasurer could then sell the securities at a later time.

Instead, Timothy Geitner made $100 billion available on Sep 7, 2008 as a funding commitment with an initial commitment fee of warrants and a variable liquidation preference on the Seniors plus periodic commitment fees. This is the opposite of a purchase. The charter act prohibits Treasury from assessing a fee unless it is in relation to a corporate debt obligation.
It really is a simple case.

The only purchase Timothy Geitner made was 1000 share of Senior Preferred Shares at $1,000 per share.
The problem has always been that FHFA and the conservatorship plus the language of the SPSPA serve to obfuscate and confuse the issue.

The next stage in my research before I am ready to file a claim is to study the Washington Federal Case as it is the only lawsuit that challenged the SPSPA. Did they claim that fees are illegal??? Anyone please post if you have any answers.

This is my last post for today

The law you site deals with the court of federal claims. This is an Article I federal tribunal created by Congress in the 1980s. The Judges are federal employees with limited terms indirectly answerable to POTUS. No thanks. Shareholders will limit direct money damages to a minimum to preserve their right to have their claim heard in an independent Article III district court.

The 6-year statute of limitations do not apply to constitutional claims.

If Treasury would have left the illegal fee at 10%, then the claim in the first instance would have continued and the 6 years statute of limitations would apply to a common law claim for a violation of statute. But lucky for shareholders Treasury keeps changing the material nature of the fee. Treasuries letter agreement and fourth amendment to increase the LP as earnings are retained is a new injury well within the 6-years.

If the claims are thrown out, then brand new constitutional claims will be put forward. By that point I wont be surprised if a constitutional construction claim of separation of powers on Treasury’s overreach is filed.

The point is is that the idea of a recap based on Treasury’s LP and warrants is not going to happen for a very long time. Shareholders still have some tools in the toolbox.

From the warrant Contract: “THIS CERTIFIES THAT, for value received, ….”

The value received was the Treasury Commitment of $100 billion later increased to $200 billion. The warrants are a “commitment fee” for the right to access the commitment.

I am arguing that this fee arrangements is prohibited by the Charter Act. I am claiming that this overreach by the Treasury is an illegal exaction arising from common law.

Here is your chance to prove me wrong. Show me any law that allows the Treasury to increase the taxpayers debt to provide the 200 billion commitment. When did Congress amend the Charter Act to allow Treasury and in the future the Federal reserve to assess fees on FNFA not in relation to FNMA corporate debt obligations? The answer to these questions are important. I truly want to be shown Im wrong before I submit my claim and ask that the SPSPA be nullified.

If the PSPA were voided and all actions reversed what would that look like?

Everything you say in this post is correct. There are no more lawsuits challenging the NWS. There are two parties to the SPSPA. One party has a statutorily unassailable right to act in its own best interests when reforming and running the GSEs as a conservator for the BOD of the GSEs. The other party has a very narrow statutorily defined set of actions to provide funding to the GSEs. The actions of this party can be challenged by the judicial branch.

Isn’t it weird that since 2008, all the lawsuits challenged the party that the Supremes upheld has the right to “do what I want and you can’t stop me”? That is quite the coincidence.

Anyway, If you read through my posts I have identified a way to potentially challenge the SPSPA in its entirety by claiming the common law definition of illegal exaction arising from Treasury’s overreach and violations of the FNMA charter act. Anyone can have their claim heard at their local district Court so long as you limit damages to no more than $10,000. Why not take the time and a few hundred dollars to file a claim in Florida? Imagine how much your shares would be worth if any one of these claims somewhere in the country succeeded? I hope you and others do something to try to get our shares worth what they should be worth without the warrants and LP. The worst that can happen is a claim be dismissed and we are right back where we find ourselves today and you can plan for the dilution. This is not legal advice, only an opinion.

HERA did include funding for F&F. HERA is an umbrella statute that did a number of things. It amended the Charter Act, It amended the Sound and Safety Act, it abolished the OFHEO as a part of HUD and created a separate independent agency (FHFA) and cut and past the FDIC statute language into the FHFA for the powers of Conservatorship and Receivership of FHFA.

The funding in HERA for F&F comes in the Temporary authorization ending in 2009 for Treasury to “purchase” FNMA mbs products, corporate debt, common shares, and preferred shares with conditions to protect taxpayers and stabilize the economy etc. This is what the amendments to the Charter act were for.

Instead we got a line of credit to draw upon quarterly in consideration for warrants for 79.9% of common shares and a senior preferred equity with a commitment fee tied to the line of credit that cannot be paid down. The so called concrete life preserver.

It is weird that Congress gave Treasury the power to buy FNMA corporate debt, and even gave them an exemption from the prohibition of assessing fees when Treasury buys corporate debt. Yet they didnt use that authority. Instead they put a covenant into the PSPA of senior preferred equity that limits FNMA ability to issue corporate debt. Weird isnt it?

FNMA gets its most of its earnings from the sale of corporate debt and MBS. Isnt it nice that Treasury is helping out so much?

Hello Ace. I received a pm from you about (you know what) GSEs. Unfortunately before I recorded the info the message was removed from the mailbox. Weird! Ive been waiting for you to post again. Can you resend the pm to me? Thanks. Look forward to it.

Im working on it every day, takes time. My question for you is are you willing to join me in my efforts? I’ve shared what I believe to be a novel legal theory that might work with the little tucker act. Probably get quashed on procedural grounds, but if more shareholders try, the chances of success increase. I hope that if I am wrong in my theories someone here will educate me. Or if others have ideas to share that they will do so. I have never bothered to read the charter act, or HERA, or the entire SPSPA in all the time Ive been on this board. That is around 9 years. I always assumed that the experts and Attorneys had devised the only legal theories that would work and so what would I gain by reading through the statutes. Boy was I mistaken, since the illegality of the SPSPA was apparent in a couple of minutes of reading the actual laws and that the Conservatorship and FHFA were not the problem. So I hope with your stated experience and knowledge you are willing to help. Even if by just reading the statutes and contracts and show me I am wrong. I am always willing to correct my thinking if shown I’m in error.

If you own shares of FNMA do you want to make money? Or do you want to just wax poetically about what our betters have planned for our shares? I have shown and will continue to show that the LP and warrants are an illegal fee in consideration of a pledge of cash from Treasury. Theft by deception. What would the common or preferred share price be tomorrow if the LP and warrants were nullified and the 300 billion returned to FNMA? That is the only remedy for the Treasuries violations of the Charter Act. Do something.

Im sorry to hear you say this. The time to act is now. Congress required the Treasury to purchase FNMA obligations and securities by 2009 by issuing gov securities under chapter 31 of Title 31. This is the public Debt of the US. Congress requires that the proceeds from the sale of these FNMA obligations purchased by 2009 be used for deficit reduction. I want to see the administrative record of the Treasury Dept. sale of gov securities to purchase the 1000 shares of Seniors. Where did the money come from to fund the initial 100 billion commitment that was offered to FNMA 1 day after the conservatorship began? How about the next 100 billion commitment? What securities were sold by Treasury between Sep 6 and Sep 7, 2008? What are the terms? Interest rate?

The liquidation Preference is an illegal fee Prohibited by Congress. The Temporary Authority for Treasury to purchase FNMA obligations and Securities has no exception for the prohibition of fees. The only exception to the existing Charter Act statute given to Treasury in section 304 of the Charter Act was to allow the Treasury to exceed the statutory cap of owning more than 2.25 Trillion in FNMA obligations. That means the warrants and the Liquidation Preference have no value making the transfer of 300 billion of FNMAs earnings to the Treasury theft by fraud. The Treasury has only provided 1 billion dollars that complies with the amended Charter act and only if that 1 billion was from the sale of gov securities.

The SPSPA is clearly illegal. How is it that not 1 attorney has bothered to read Charter Act and file a lawsuit to nullify the SPSPA as a blatant violation of established law since 2008? This is the problem with the so called “expert class” our betters. The arrogance and hubris is astounding. I hope you and others consider taking action and not wait.

Thanks FOF.

First, I am not an Attorney and I am not giving any legal advice. These posts are only my opinion of what could be done. I encourage you to check with a licensed Attorney if concerned.
Having said that, I am a retired regulator for a gov agency. I have written regulations and understand the rules of their construction and the requirements of administrative law when drafting regulations. So my ideas on this subject draw from my career experience.

I have not begun to research Freddie Mac's charter as I only recently purchased shares and don't believe I have standing to file a claim.

As far as standing goes, I believe you will have standing if you are a US citizen and your claim is a covered claim that the district court has jurisdiction for within the Statute of limitations. For Constitutional claims I believe there is no limit, for all others it is 6 years. The claims covered under the Little Tucker Act are listed here:

28 U.S. Code § 1346 - United States as defendant
U.S. Code
Notes
prev | next
(a)The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:
(1)Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws;
(2)Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort, except that the district courts shall not have jurisdiction of any civil action or claim against the United States founded upon any express or implied contract with the United States or for liquidated or unliquidated damages in cases not sounding in tort which are subject to sections 7104(b)(1) and 7107(a)(1) of title 41. For the purpose of this paragraph, an express or implied contract with the Army and Air Force Exchange Service, Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, or Exchange Councils of the National Aeronautics and Space Administration shall be considered an express or implied contract with the United States.

In my case, I would file a claim for liquidated or unliquidated damages in cases not sounding in tort. Specifically an illegal exaction of property rights arising from common law for Treasury's overreach in extracting a fee in the form of a liquidation preference of its Senior Shares in consideration for cash in violation of the plain language prohibition of such fee arrangement in the Charter Act. To forestall any statute of limitation defense I would limit my claims to any amendment and or quarterly NWS or increase in LP in the past 6 years. Probably just use the 4th amendment and letter agreements.

In plain language (as I am beginning to understand what happened) I will summarize my theory. Let us assume that the federal gov was honest and telling the truth about the insolvency of FNMA. I believe the number was by around 67 billion short. Under the temporary authority granted to Treasury in 2008, they could have purchased 67 billion worth of FNMA obligations instantly recapitalizing them to solvency. Treasury could then sell the obligations and use the money for the required debt reduction. This would have satisfied the requirements about stabilizing the economy, preserving FNMA as private companies, protecting the taxpayers etc listed in the amended Charter Act. This is what was supposed to have happened. At that time FHFA-C could have lobbied for the return of money from the Bank settlements further recapitalizing their ward. They could continue to reform FNMA through regulations as well. The conservatorship would have been over in a year or two. Certainly once the DTAs were reversed. But because of Treasuries illegal initial commitment fee in consideration for cash, nothing has happened for decades and FNMA has been nationalized.

I hope posters will go and read through my posts. Especially the last post in response to Achilles. In it I am sharing what I believe to be a novel but viable legal strategy that any of us can take to challenge the actions of the Secretary of the Treasury. Notice I have not said the FHFA. That ship has sailed and it has sunk. Continuing in my research of the SPSPA and its relationship to the amended Charter Act we find the following statute:

“(3) FUNDING.—For the purpose of the authorities granted in this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the purposes for which securities may be issued under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any rights received in connection with such purchases under this subsection shall be deemed appropriated at the time of such purchase, modification, or exercise.”

So in order to purchase FNMA obligations and securities it must first sell government securities under the public debt of the United States. Bonds and notes require the approval of the President. What securities did the Treasury sell to make the first 100 billion of commitment available in the SPSPA? What about the second 100 billion. Is there an administrative record of these transactions? What are the terms of these securities? Interest rates, length? Are these 200 billion recorded in the public debt of the united States. Did POTUS approve the sale?

Finally, the treasury commitment of 200 billion is not a purchase, it is a pledge of support. That is not what Congress authorized Treasury to do. The purchase price of the Seniors was 1 billion dollars. This is just one more example of the illegality of the SPSPA in its entirety. And the beauty of these theories is that FHFA is not involved and the Conservatorship is irrelevant. The Director has no power to sell gov securities only the Secretary of the Treasury. Shareholders beef is and always has been with Treasury alone.

I am glad you asked. I have spent a lot of time doing some due diligence on the SPSPA and the statutes and I believe that like your handle have found the achilles heal of the whole conundrum.

The answer to your question is concerned shareholders.

Most long-term posters here suspect that the conservatorship was never needed to begin with. Shady accounting and stuff like that. We find ourselves still in a conservator prison for one reason. Timothy Geitner, instead of using his authority to temporarily purchase agency obligations and shares on the open market , chose to conspire with a brand new FHFA to impose a commitment fee consisting of Seniors, warrants, and liquidation preference in consideration of 100 billion of cash, despite the fact that such a commitment fee arrangement is prohibited by the Charter Act.

The novel legal strategy I encourage all concerned shareholders to do is as follows.

Contact your district Federal Court and ask for guidance on filing a pro se claim. They will be happy to help. Or higher a lawyer to help. You can file for a couple hundred dollars.

File a claim for any amount of money damages less than $10,000 (a nickel, 5, 500 doesnt matter) even if your damages are greater than $10,000, limit it to less than $10,000. The goal is to use your district Court as original jurisdiction under the Little Tucker Act, and avoid the court of claims in DC. If we can get similar claims filed all across the US that would increase the chances of success.

The claim for damages arrises from a violation of the FNMA charter act by the imposition of the commitment fee on the FNMA BOD by the Secretary of the Treasury in consideration of cash. Site the statute prohibiting this fee. Reference the SPSPA.

Any lawsuit must be simple. The evidence is prima facia in public documents. The Charter act prohibits fees. The SPSPA imposes a fee.

Any claim must leave out any mention of FHFA, conservator, HERA, Sound and Safety Act. None of these are relevant to the claim. Keep it simple. The less opportunity for interpretation the better.

Lets say a district court grants the relief of say $200 in damages. The SPSPA states that if a court of competent jurisdiction rules against the agreement then the entire agreement is null and void.

What happens next is anyones business. I would expect a little market chaos, Congressional Hearings maybe. Who knows. Most likely the billionaire hedgehogs will want their Attorneys Fees refunded. Time to act, this will cost a shareholder a few hundred dollars and some time for research. Seems a small price to pay to enable Pats sky high common sp.

Rodney, you need to go back and read my post and contemplate what I am saying. That post is not talking about the NWS but the initial commitment fee in the original SPSPA. You need to follow your advise and read the entire agreement. Especially the terms of the original and the restated terms in addition to the amendments. The seniors and warrants and associated liquidation preference are defined as an initial commitment fee on the part of the seller in consideration for Treasuries pledge to make up to 200,000 billion available. This is a prima facia illegal act according to the Congress in the plain language of the Charter Act. You are stuck in the trap of thinking HERA is the end all be all. Hera is just one part of many laws that were amended in 2008 including the Charter Act. The Supreme court ruled that the actions of the conservator including enacting the 3rd amendment were legal within the narrowly defined statutes concerning the powers of conservator and receiver. Not one Court has ruled on the legality of the NWS or the SPSPA as it relates to the plain language of the Charter Act. That is because no one has bothered to ask a court. Instead they have been asked to rule on the APA, Delaware Corporate Law, HERA, and various Constitutional theories. I predict that when I or someone else files suit, that the case will not go past the district level on merit. Maybe on procedural grounds. Because the language of the SPSPA acknowledges that both parties agree it will not violate the Charter act, if it does then the entire agreement will be null and void. There is also a non severability clause that achieves the same result. Go and read the entire contract. How come Epstein didnt tell us that Congress has a blanket prohibition against an initial commitment fee in consideration of a pledge by Treasury to fund FNMA with cash? This is my last post for today.

BOOM!!!

Senior Preferred Shares, Warrants and Liquidation preference defined in the SPSPA as a Fee in exchange for Treasuries pledge (commitment of 200 billion). A quid pro quo.

There is a huge problem with this. The Congress of the United States in the Charter Act prohibits the US Government from assessing any fee on FNMA with the exception of Income Taxes and FHFA assessments. No exceptions. See language below:

“(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 309(g) of this Act and assessments pursuant to section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or charge may be assessed or collected by the United States (including any executive department, agency, or independent establishment of the United States) on or with regard to the purchase, acquisition, sale, pledge, issuance, guarantee, or redemption of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury pursuant to subsection (c) of this section.”

Subsection C is Treasuries ability to buy 2.25 trillion in obligations and has nothing to do with the temporary authority to purchase securities due to the financial crises.

Congress intended Treasury to have temporary authority to purchase obligations in excess of the 2.25 trillion in section C of the Charter Act for the purpose of calming the markets and help stabilize the GSEs. Purchase of common shares on the open market were also contemplated and preferred shares was an option. But only if the BOD agreed.

Instead our unelected bureaucrats bastardized the intent of Congress and obfuscated everything behind the mysterious powers of a conservator. The Courts have ruled as they have with no choice because none of the plaintiff attorneys have raised the issues under the plain language of the Charter Act instead focusing on the language of the agreement behind the wall of conservatorship.

Thanks for the response KT. You are correct that the conservator suspended the capital classifications using their powers as Conservator under HERA. Please go back and re-read my post. The Charter act isnt concerned with capial classifications, thats a construct for the regulator to use to oversee the GSEs. The Charter act is referencing the statutory definitions of Total Capital, Core Capital, and minimum capital. The only definition of these three in the Safety and soundness statute that the director can change by regulation is the minimum capital. And only to set it higher than the statutory level. Which Catman did in fact do. Hera provisions on powers of the conservator or receiver cannot amend a statute. Not possible. This issue I bring up is a statutory challenge to the SPSPA. The language of the contract states that it cannot interfere with the responsibilities of the Director as regulator, and cannot violate the Charter Act. HERA does not enable the Treasury to do anything. Only the Charter Act enables Treasury and FHFA-C to enter into the agreements. The Charter act takes precident to HERA as the amended Safety and Soundness Act of 1992 arises from the fact the Congress created the GSEs. Whether or not prior written approval for each quarterly NWS is public information and would need to be discovered if it in fact was given to FNMA. A blanket approval signature in the 3rd amendment would be a matter for a judge to decide if it meets the statutory responsibility Congress intended of the Director set out in the Charter Act not Hera. In any event, the Charter act requires that all earnings of FNMA be transferred on an annual basis to the general surplus account of the enterprise. What Congress does not say is transfer all earnings quarterly to the Department of Treasury. In addition there are statutory provisions regarding the accounting of these annual transfers to the general account that I have not gotten into. Going to be pretty hard to get a judge to twist the Congress’s plain language statute to interpret it away. I wouldnt put it past them though. For these reasons the NWS is clearly ultra vires to the Charter act. If only the man of steel payed attention to charter law instead of Delaware law.

I am Sorry you don't know what I am talking about. In a nutshell I am saying that every Quarterly NWS violated The Charter Act. The Charter Act prohibits a capital distribution as defined by the 3rd amendment to the SPSPA unless prior written approval of the Director of FHFA is obtained. This is an enumerated statutory responsibility of the director. Agency discretion and interpretation under the Supreme Courts Chevron decision is not applicable here. The SPSPA states that the agreement will not interfere with the responsibilities of the director of FHFA and will not contravene the Charter Act. The 3rd amendment does both.

The Charter Act can be found here:
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf

The specific pertinant language is here:
(b) FEES AND CHARGES; ANNUAL TRANSFER OF EARNINGS TO GENERAL SURPLUS ACCOUNT.—
(1) The corporation may impose charges or fees, which may be regarded as elements of pricing, with the objective that all costs and expenses of the operations of the corporation should be within its income derived from such operations and that such operations should be fully self-supporting.
(2) All earnings from the operations of the corporation shall annually be transferred to the general surplus account of the corporation. At any time, funds of the general surplus account may, in the discretion of the board of directors, be transferred to reserves.
(c) CAPITAL DISTRIBUTIONS FROM GENERAL SURPLUS ACCOUNT; MINIMUM CAPITALIZATION LEVELS.—
(1) Except as provided in paragraph (2), the corporation may make such capital distributions (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) as may be declared by the board of directors. All capital distributions shall be charged against the general surplus account of the corporation.
(2) The corporation may not make any capital distribution that would decrease the total capital of the corporation (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) to an amount less than the risk-based capital level for the corporation established under section 1361 of such Act or that would decrease the core capital of the corporation (as such term is defined in section 1303 of such Act) to an amount less than the minimum capital level for the corporation established under section 1362 of such Act, without prior written approval of the distribution by the Director of the Federal Housing Finance Agency.

A look at the SPSPA found here (
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Amend-and-Restated-SPSPA_09-26-2008.pdf )
shows the importance of the above premise in the language related to the Charter Act.

AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of September 26, 2008, between the UNITED STATES DEPARTMENT OF THE TREASURY (“Purchaser”) and FEDERAL NATIONAL MORTGAGE ASSOCIATION (“Seller”), acting through the Federal Housing Finance Agency (the “Agency”) as its duly appointed conservator (the Agency in such capacity, “Conservator”). Reference is made to Article 1 below for the meaning of capitalized terms used herein without definition.
Background
A. The Agency has been duly appointed as Conservator for Seller pursuant to Section 1367(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as amended, the “FHE Act”). Conservator has determined that entry into this Agreement is (i) necessary to put Seller in a sound and solvent condition; (ii) appropriate to carry on the business of Seller and preserve and conserve the assets and property of Seller; and (iii) otherwise consistent with its powers, authorities and responsibilities.

Obviously the 3rd amendment is inconsistent with the statutory responsibility to provide prior written approval of each quarterly NWS.

B. Purchaser is authorized to purchase obligations and other securities issued by Seller pursuant to Section 304(g) of the Federal National Mortgage Association Charter Act, as amended (the “Charter Act”). The Secretary of the Treasury has determined, after taking into consideration the matters set forth in Section 304(g) (1)(C) of the Charter Act, that the purchases contemplated herein are necessary to (i) provide stability to the financial markets; (ii) prevent disruptions in the availability of mortgage finance; and (iii) protect the taxpayer.

So the enabling statute of this agreement (3rd Amendment) for both the Treasury and FHFA is the Charter Act. Not HERA.

4. REPRESENTATIONS
Seller represents and warrants as of the Effective Date, and shall be deemed to have represented and warranted as of the date of each request for and funding of an advance under the Commitment pursuant to Article 2, as follows:
4.1. Organization and Good Standing. Seller is a corporation, chartered by the Congress of the United States, duly organized, validly existing and in good standing under the laws of the United States and has all corporate power and authority to carry on its business as now conducted and as proposed to be conducted.
4.2. Organizational Documents. Seller has made available to Purchaser a complete and correct copy of its charter and bylaws, each as amended to date (the “Organizational Documents”). The Organizational Documents are in full force and effect. Seller is not in violation of any provision of its Organizational Documents.

Again The Charter Act is the enabling Statute of this agreement. Not Hera.

4.5. Non-Contravention.
(a) The execution, delivery or performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Organizational Documents of Seller; (ii) conflict with or violate any law, decree or regulation applicable to Seller or by which any property or asset of Seller is bound or affected, or (iii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien upon any of the properties or assets of Seller, pursuant to any note, bond, mortgage, indenture or credit agreement, or any other contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Seller is a party or by which Seller is bound or affected, other than, in the case of clause (iii), any such breach, default, termination, amendment, acceleration, cancellation or lien that would not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, property, operations or condition of the Seller, the authority of the Conservator or the validity or enforceability of this Agreement (a “Material Adverse Effect”).
(b) The execution and delivery of this Agreement by Seller does not, and the consummation by Seller of the transactions contemplated by this Agreement will not, require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any governmental authority or any other person, except for such as have already been obtained.

The 3rd amendment violates the Charter Act and this provision of the agreement since the agreement does not state the statutory requirement of obtaining written approval of the Director of the FHFA acting as regulator.

Finally it is interesting that the SPSPA requires the written approval of the purchaser (Treasury) at least 10 times. Yet not 1 mention of the statutorily required written prior approval by the director of the FHFA for a capital distribution as defined in the Charter Act.

I am Sorry you don't know what I am talking about. In a nutshell I am saying that every Quarterly NWS violated The Charter Act. The Charter Act prohibits a capital distribution as defined by the 3rd amendment to the SPSPA unless prior written approval of the Director of FHFA is obtained. This is an enumerated statutory responsibility of the director. Agency discretion and interpretation under the Supreme Courts Chevron decision is not applicable here. The SPSPA states that the agreement will not interfere with the responsibilities of the director of FHFA and will not contravene the Charter Act. The 3rd amendment does both.

The Charter Act can be found here:
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf

The specific pertinant language is here:
(b) FEES AND CHARGES; ANNUAL TRANSFER OF EARNINGS TO GENERAL SURPLUS ACCOUNT.—
(1) The corporation may impose charges or fees, which may be regarded as elements of pricing, with the objective that all costs and expenses of the operations of the corporation should be within its income derived from such operations and that such operations should be fully self-supporting.
(2) All earnings from the operations of the corporation shall annually be transferred to the general surplus account of the corporation. At any time, funds of the general surplus account may, in the discretion of the board of directors, be transferred to reserves.
(c) CAPITAL DISTRIBUTIONS FROM GENERAL SURPLUS ACCOUNT; MINIMUM CAPITALIZATION LEVELS.—
(1) Except as provided in paragraph (2), the corporation may make such capital distributions (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) as may be declared by the board of directors. All capital distributions shall be charged against the general surplus account of the corporation.
(2) The corporation may not make any capital distribution that would decrease the total capital of the corporation (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) to an amount less than the risk-based capital level for the corporation established under section 1361 of such Act or that would decrease the core capital of the corporation (as such term is defined in section 1303 of such Act) to an amount less than the minimum capital level for the corporation established under section 1362 of such Act, without prior written approval of the distribution by the Director of the Federal Housing Finance Agency.

A look at the SPSPA found here (
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Amend-and-Restated-SPSPA_09-26-2008.pdf )
shows the importance of the above premise in the language related to the Charter Act.

AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of September 26, 2008, between the UNITED STATES DEPARTMENT OF THE TREASURY (“Purchaser”) and FEDERAL NATIONAL MORTGAGE ASSOCIATION (“Seller”), acting through the Federal Housing Finance Agency (the “Agency”) as its duly appointed conservator (the Agency in such capacity, “Conservator”). Reference is made to Article 1 below for the meaning of capitalized terms used herein without definition.
Background
A. The Agency has been duly appointed as Conservator for Seller pursuant to Section 1367(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as amended, the “FHE Act”). Conservator has determined that entry into this Agreement is (i) necessary to put Seller in a sound and solvent condition; (ii) appropriate to carry on the business of Seller and preserve and conserve the assets and property of Seller; and (iii) otherwise consistent with its powers, authorities and responsibilities.

Obviously the 3rd amendment is inconsistent with the statutory responsibility to provide prior written approval of each quarterly NWS.

B. Purchaser is authorized to purchase obligations and other securities issued by Seller pursuant to Section 304(g) of the Federal National Mortgage Association Charter Act, as amended (the “Charter Act”). The Secretary of the Treasury has determined, after taking into consideration the matters set forth in Section 304(g) (1)(C) of the Charter Act, that the purchases contemplated herein are necessary to (i) provide stability to the financial markets; (ii) prevent disruptions in the availability of mortgage finance; and (iii) protect the taxpayer.

So the enabling statute of this agreement (3rd Amendment) for both the Treasury and FHFA is the Charter Act. Not HERA.

4. REPRESENTATIONS
Seller represents and warrants as of the Effective Date, and shall be deemed to have represented and warranted as of the date of each request for and funding of an advance under the Commitment pursuant to Article 2, as follows:
4.1. Organization and Good Standing. Seller is a corporation, chartered by the Congress of the United States, duly organized, validly existing and in good standing under the laws of the United States and has all corporate power and authority to carry on its business as now conducted and as proposed to be conducted.
4.2. Organizational Documents. Seller has made available to Purchaser a complete and correct copy of its charter and bylaws, each as amended to date (the “Organizational Documents”). The Organizational Documents are in full force and effect. Seller is not in violation of any provision of its Organizational Documents.

Again The Charter Act is the enabling Statute of this agreement. Not Hera.

4.5. Non-Contravention.
(a) The execution, delivery or performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Organizational Documents of Seller; (ii) conflict with or violate any law, decree or regulation applicable to Seller or by which any property or asset of Seller is bound or affected, or (iii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien upon any of the properties or assets of Seller, pursuant to any note, bond, mortgage, indenture or credit agreement, or any other contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Seller is a party or by which Seller is bound or affected, other than, in the case of clause (iii), any such breach, default, termination, amendment, acceleration, cancellation or lien that would not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, property, operations or condition of the Seller, the authority of the Conservator or the validity or enforceability of this Agreement (a “Material Adverse Effect”).
(b) The execution and delivery of this Agreement by Seller does not, and the consummation by Seller of the transactions contemplated by this Agreement will not, require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any governmental authority or any other person, except for such as have already been obtained.

The 3rd amendment violates the Charter Act and this provision of the agreement since the agreement does not state the statutory requirement of obtaining written approval of the Director of the FHFA acting as regulator.

Finally it is interesting that the SPSPA requires the written approval of the purchaser (Treasury) at least 10 times. Yet not 1 mention of the statutorily required written prior approval by the director of the FHFA for a capital distribution as defined in the Charter Act.

I am Sorry you don't know what I am talking about. In a nutshell I am saying that every Quarterly NWS violated The Charter Act. The Charter Act prohibits a capital distribution as defined by the 3rd amendment to the SPSPA unless prior written approval of the Director of FHFA is obtained. This is an enumerated statutory responsibility of the director. Agency discretion and interpretation under the Supreme Courts Chevron decision is not applicable here. The SPSPA states that the agreement will not interfere with the responsibilities of the director of FHFA and will not contravene the Charter Act. The 3rd amendment does both.

The Charter Act can be found here:
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/aboutus/pdf/fm-amended-charter.pdf

The specific pertinant language is here:
(b) FEES AND CHARGES; ANNUAL TRANSFER OF EARNINGS TO GENERAL SURPLUS ACCOUNT.—
(1) The corporation may impose charges or fees, which may be regarded as elements of pricing, with the objective that all costs and expenses of the operations of the corporation should be within its income derived from such operations and that such operations should be fully self-supporting.
(2) All earnings from the operations of the corporation shall annually be transferred to the general surplus account of the corporation. At any time, funds of the general surplus account may, in the discretion of the board of directors, be transferred to reserves.
(c) CAPITAL DISTRIBUTIONS FROM GENERAL SURPLUS ACCOUNT; MINIMUM CAPITALIZATION LEVELS.—
(1) Except as provided in paragraph (2), the corporation may make such capital distributions (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) as may be declared by the board of directors. All capital distributions shall be charged against the general surplus account of the corporation.
(2) The corporation may not make any capital distribution that would decrease the total capital of the corporation (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) to an amount less than the risk-based capital level for the corporation established under section 1361 of such Act or that would decrease the core capital of the corporation (as such term is defined in section 1303 of such Act) to an amount less than the minimum capital level for the corporation established under section 1362 of such Act, without prior written approval of the distribution by the Director of the Federal Housing Finance Agency.

A look at the SPSPA found here (
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/SPSPA-amends/FNM-Amend-and-Restated-SPSPA_09-26-2008.pdf )
shows the importance of the above premise in the language related to the Charter Act.

AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of September 26, 2008, between the UNITED STATES DEPARTMENT OF THE TREASURY (“Purchaser”) and FEDERAL NATIONAL MORTGAGE ASSOCIATION (“Seller”), acting through the Federal Housing Finance Agency (the “Agency”) as its duly appointed conservator (the Agency in such capacity, “Conservator”). Reference is made to Article 1 below for the meaning of capitalized terms used herein without definition.
Background
A. The Agency has been duly appointed as Conservator for Seller pursuant to Section 1367(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as amended, the “FHE Act”). Conservator has determined that entry into this Agreement is (i) necessary to put Seller in a sound and solvent condition; (ii) appropriate to carry on the business of Seller and preserve and conserve the assets and property of Seller; and (iii) otherwise consistent with its powers, authorities and responsibilities.

Obviously the 3rd amendment is inconsistent with the statutory responsibility to provide prior written approval of each quarterly NWS.

B. Purchaser is authorized to purchase obligations and other securities issued by Seller pursuant to Section 304(g) of the Federal National Mortgage Association Charter Act, as amended (the “Charter Act”). The Secretary of the Treasury has determined, after taking into consideration the matters set forth in Section 304(g) (1)(C) of the Charter Act, that the purchases contemplated herein are necessary to (i) provide stability to the financial markets; (ii) prevent disruptions in the availability of mortgage finance; and (iii) protect the taxpayer.

So the enabling statute of this agreement (3rd Amendment) for both the Treasury and FHFA is the Charter Act. Not HERA.

4. REPRESENTATIONS
Seller represents and warrants as of the Effective Date, and shall be deemed to have represented and warranted as of the date of each request for and funding of an advance under the Commitment pursuant to Article 2, as follows:
4.1. Organization and Good Standing. Seller is a corporation, chartered by the Congress of the United States, duly organized, validly existing and in good standing under the laws of the United States and has all corporate power and authority to carry on its business as now conducted and as proposed to be conducted.
4.2. Organizational Documents. Seller has made available to Purchaser a complete and correct copy of its charter and bylaws, each as amended to date (the “Organizational Documents”). The Organizational Documents are in full force and effect. Seller is not in violation of any provision of its Organizational Documents.

Again The Charter Act is the enabling Statute of this agreement. Not Hera.

4.5. Non-Contravention.
(a) The execution, delivery or performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Organizational Documents of Seller; (ii) conflict with or violate any law, decree or regulation applicable to Seller or by which any property or asset of Seller is bound or affected, or (iii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien upon any of the properties or assets of Seller, pursuant to any note, bond, mortgage, indenture or credit agreement, or any other contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Seller is a party or by which Seller is bound or affected, other than, in the case of clause (iii), any such breach, default, termination, amendment, acceleration, cancellation or lien that would not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, property, operations or condition of the Seller, the authority of the Conservator or the validity or enforceability of this Agreement (a “Material Adverse Effect”).
(b) The execution and delivery of this Agreement by Seller does not, and the consummation by Seller of the transactions contemplated by this Agreement will not, require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any governmental authority or any other person, except for such as have already been obtained.

The 3rd amendment violates the Charter Act and this provision of the agreement since the agreement does not state the statutory requirement of obtaining written approval of the Director of the FHFA acting as regulator.

Finally it is interesting that the SPSPA requires the written approval of the purchaser (Treasury) at least 10 times. Yet not 1 mention of the statutorily required written prior approval by the director of the FHFA for a capital distribution as defined in the Charter Act.

Thanks LULe. I understand and sometimes feel the same way. The problem is that since the Chevron precedent, the Courts have deferred to gov agencies on the presumption of correctness whenever a law gives wide latitude to the executive branch to carryout a function of a law that isnt enumerated. Environmental laws are full of this. Language such as “as determined by the director”. HERA is exactly this way when trying to change a decision made by the director when acting as Conservator. This is actually a good thing. The problem for shareholders is that all of the challenges are focused on the amendments to the safety and soundness act of 1992 that created FHFA. If you step back to 35,000 ft. You see that the relationship of the statutes involved is as follows. Congress creates the GSEs in the Charter Act. Then Congress creates a regulatory framework for the GSEs in HERA. HERA gives birth to Conservatorship. Ok great so far. All the lawsuits target actions of a Conservator and they all fail due to presumption of correctness. This is a failure of the legal strategies. Not a failure of the Judges. If we go back to the Statutes we find that the controlling Statute is the Charter Act. FHFA is a child of this law not the other way around. If there is no GSEs created there is no safety and Soundness. If we look at the SPSPA it is stated that only the Charter Act enables Treasury to enter into the agreement. Not the actions of a Conservator. Further Congress enumerated as Judge Lamberth has said “Clear as Day” that a capital distribution that lowers FNMAs capital below the limits established in the Safety and Soundness Act is prohibited unless prior written approval of the director of FHFA is obtained. This is a direct responsibility of the director enumerated by Congress and predates HERA. If Congress didnt want this in the statute, they could have eliminated it when amending the Charter Act. Instead they changed the the name of the agency to FHFA. This is the proper law to challenge the NWS under. There is no opportunity for a judge to apply the Chevron precedent here. An act of Congress that enumerates a Responsibility of the Director of FHFA supersedes any words on a page of an agreement that violates this direct responsibility. No matter the action is due to conservatorship. This is such a basic fact that I can only assume the attorneys wern’t really interested in reversing the NWS. Do you know of any argument put foreword to date in a Court case that argues along these lines? Lamberth would have overturned the NWS sweep on this alone had the argument been made. There would be no appeal because the parties both agree in the SPSPA that the agreement will not contravene any part of the Charter Act. The NWS would have been an interesting footnote on bad government. But instead here we are 14 years later. The money is all coming back.