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Possibly. Those are fair points. One way to avoid the hedge fund optics is to deny remedy to sophisticated investors (Hedge Funds, Banks holding JPS), but not mom & pop investors.
IMO three lines of thought support this.
First, there is a securities law remedy principle in synthetic investing that holds more sophisticated investors to a higher standard of risk expectations. This further developed out of the PLS derivative mess.
Second, federal regulations already draw a similar distinction by making certain investments off-limits, from the get-go, except for highly accredited investors.
Finally neither Ps nor Ds have raised this. That very silence fact can be a dead give-away that -in fact - it is already the elephant in the room. Law clerks will mention it only when it’s necessary- that is - when a final remedy order goes in its draft stage.
“The majority of SCOTUS says application of HERA by the government has been fine and dandy … with respect to the letter of HERA (…and … constitution).”
Yes & No. Ya SCOTUS evaluated the NWS under APA 702 and found it lawful per its interpretation of HERA. But if you are assuming this same result also spells doom on other claims...
No. SCOTUS said the inception of the NWS was a lawful act, but…Takings are - by definition - always lawful. If instead the acts were unlawful, the actions are illegal exactions. So, for example, an absence of illegality hardly precludes a Takings claim; in fact, in reality such a precedent allows courts to leap over the lawfulness question, and move on to other necessary claim elements, and to factual & legal debate.
But forget me. Instead, Listen to Chief Rogers’ majority opinion from Knick v. Township of Scott, No. 17-647 (June 21, 2019), and especially page 23 (slip opinion):
“Our holding that uncompensated takings violate the Fifth Amendment will not expose governments to new liability; it will simply allow into federal court takings claims that otherwise would have been brought as inverse condemnation suits in state court.
Governments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional. As long as just compensation remedies are available -- as they have been for nearly 150 years -- injunctive relief will be foreclosed. For the same reason, the Federal Government need not worry that courts will set aside agency actions as unconstitutional under the Administrative Procedures Act. [EMPHASIS]. Federal courts will not invalidate an otherwise lawful uncompensated taking when the property owner can receive complete relief through a Fifth Amendment claim brought under the Tucker Act. [EMPHASIS]
Slip op. at 23
I never knew who it was for HERA but I never explored it…so…thanx for the info.
I do know (to a certainty) that 2 years later the very same condition (for CFPB) was added to Dodd-Frank ***after*** committee deleted the condition (!) before rendering its approval. It had been contested during the initial floor debate, so Committee **removed it**. Yet it somehow made it BACK into the final bill before Congress’ vote! Because of this odd timing I could never find any online legislative record at all of its proponent. To this day, I still wonder ‘who’ and whether there was any quid pro quo.
Agree POTUS letter strengthens. Thompson pointed out quite astutely that the only BO administration high-level holdover that Trump did NOT fire was Mel Watt (“democratic hack Mel Watt”). Trumps inaction tends to corroborate his (implied) assertion that he believed *in good faith* that Congress in HERA created an Independent Agency, thus at-will firing of an Acting Director would be a clear Article II power violation. POTUS is hardly alone in this thinking.
How can anyone even assert that in a case of statutory uncertainty POTUS’ good faith belief — leading him to NOT act against the stated will of Congress—must be presumed faulty or unreliable? IMO a self-defeating assertion. We will soon see if 9 or more judges agree.
Virtually all Agency statutes signed into law today contain some manner of rights, power, or duty that is intentionally ambiguous and thus, policy choice. This is all *by design*. Congress shifts the blame that way. Pork flows. Agency 2 blames Agency 1. Judges defer on APA suits because of Chevron. Unless a taking or contract is pursued & found, Nobody wins except the influencers. The framers must all be”SMDH”.
Sr Judge Royce Lamberth is at the D.C. District Court. FRE 201 does not apply to District Courts, only to Appellate Courts.
This will be remanded.
Defense is arguing best that as a matter of law, even considering the POTUS letter, there is no set of facts pled that can establish the counter-factual in this instance because politics and shifting priority itself is an equal factor in determining causality and thus ‘Harm’ is impossible to adjudicate with any reasonable accuracy. This effectively builds a non-justiciable point into the harm analysis; it’s analogous to why SCOTUS continues to reject any adjudication of gerrymandering on ‘science’.
Yet this point too has some logical merit so I expect Remand, for District Court to try to develop facts further and test its own legal analysis as courts must in such areas—with case by case adjudication.
The other reason Defense argues is POTUS could have directed UST to stop paying the NWS because UST Secretary reports directly at-will to POTUS. There is some merit to this point because- —effectively—POTUS can *anytime* order one at-will federal department or agency Director to reneg or breach an agreement with another agency. In my experience federal agencies can & do sue each other, …more often than you might think…and it is usually motivated by a legitimate policy (political) dispute. Ultimately IMO though
This is an unwinnable circular argument because FHFA was understood by the Admin to be independent under HERA; so to ‘work around’ the will of Congress would have been no different than removing the for-cause FHFA Director. Such act could have been considered itself a violation of separation of powers of the worst kind…an attempt to reduce the Director of the FHFA to an under-Secretary of the UST.
IMO en banc will remand to District Court.
The former-POTUS after-the-fact letter does not meet FRE 201 standards for judicial notice at the Appellate level. The defense deserves the chance to try to exclude it from evidence at trial but IMO it will be admitted; I am unsure if it will be admitted without first Defense getting to depose or cross-exam Trump. There are arguments on both sides: a FRE allowing it, but historical precedent *clearly allows and encourages* ex-Presidents to testify.
The Consolidated cases’ best evidence pled in the COFC (emails, depositions) is also still pre-trial and, so here again, would not qualify. If the COFC Appellate Court were to (surprisingly) direct a summary judgment for the Ps on a Taking, then the Fifth Crct might have a harder argument for remanding. But neither is likely to happen. There are open questions of fact and law in both Districts. Hurry up and wait. GLTA.
FHFA a branch? Branch, no. Thorn, yes.
Expert witnesses are not the same as material witnesses who generally can testify to only first-hand facts, and are also presumed too impartial to offer any sort of independent expert opinion or appraisal. Mario Ug., IMO, must have be just a material witness (in reality, a dumb door stop).
An opinion offered as expertise to try to persuade on the merits of a controversy is limited to people & subject matter meeting fairly uniform standards now (the Daubert for science, which finance obviously is).
Each party will buy services of a world class fee-based financial ‘sophisticate’.
My guess?
Ps look at conservative gurus with pedigrees from Harvard, Boston U, U Penn, Texas.
Ds will look at Yale, Stanford (liberal).
“that letter seemes to have thrown a wrench into all the court cases workings.”
I think it’s likely DC Circuit & the USCFC pushed “hold” on their statuses, once Fifth agreed to the unusual inter-remand Oral. But I think both courts will hear the oral argument as ‘no effect’. That’s how I heard it. Collins most likely remanded without anything added to the SCOTUS instruction for determining “compensable harm”.
I doubt DT letter will be given judicial notice at any court, nor do I think it is automatically excludable under federal rules of evidence. Ds know admissibility is quite feasible so the case is now ‘weightier’ for Ps. Its leverage, for now.
Presumably both USCFC and DC will immediately review today’s discussion and move forward. At *best* the DT letter is only circumstantial and tangential relevance value to the taking & bad faith.
kthomp19, thanks for the insight on your preference and strategy.
Louie Here is my Collins summary thru SCOTUS '21.
Ps Case CLAIMS
(1) FHFA exceeded its HERA Conservator powers, via the NWS; Ps demanded relief under the Administrative Procedures Act, 702 ("statutory claim") which mandates that courts "shall set aside" the action (NWS reversal).
(2) FHFA's structure under HERA violates the separation of powers ("Constitutional claim"); Ps demanded reversal of the NWS to-date.
I.
The District Court dismissed the Statutory claim and granted summary judgment in the FHFA's favor on the Constitutional claim.
IIa.
The Fifth Circuit "Panel" (3 judges) issued an opinion but it has been vacated (no precedential value).
IIb. Fifth Circuit En Banc:
(1) Reversed the District Court's dismissal of the statutory claim and found FHFA exceeded its powers, and, that Ps were entitled to Summary Judgment; however remedy was limited to injunctive relief (not NWS reversal); and
(2) Affirmed 9-7 that HERA violated separation of powers, but limited Ps remedy to just severance of the removal clause, and not vacating and setting aside the NWS.
III. SCOTUS
(1) Reversed the En Banc statutory claim opinion, holding (9-0) FHFA acted within HERA powers via the NWS [explanation omitted for brevity].
(2) Affirmed HERA removal clause does violate separation of powers, but holding (7-2) only for actions by a fully appointed Director. Thus the NWS was not reversible. But, later NWS actions could be reversible if (A) Taken by a full Director *and* (B) facts show the clause actually precluded POTUS from his duty to uphold execution of law
[Note: SCOTUS furnishes no definition or rule that to apply to meeting part B of this new '2 stepper'; instead, Alito lists 3 hypotheticals, stronger to weaker, suggesting persuasive strength along similar lines]
Sorry, ya I misunderstood you. Yep 80% max F/Fguarantee would go to the holder in due course.
In the GFC, some MIs survived (e.g., MGIC, Radian, GE), and a few big ones failed, but new ones sprung up immediately to fill the void (Essent, Triad, NMI).
Your last point is the key distinction that you hit upon but many folks cannot grasp or choose to ignore: it was F/F’s shift into building their own securities portfolios with *risky third party products*, (not the F/F ‘flow’ guarantee business) that was the major fly in the ointment, leading to HERA, FHFA & the rest … which is history … and probably future (if not simultaneously).
Cartoon: epic. Lol. I am stealing this.
Kinda wish you & kthomp19 would start over. Just press reset. Take a lesson from Danny LaRusso and Johnny Lawrence (“Cobra Kai”). Stop going at each other like a petty rivalry: nobody wins.
Instead, stake out common ground. A friendly but robust discussion of active case and legal issues might even uncover something that Ps ‘bus-stop bench lawyers’ have missed. Namaste. GLTA.
Really? You didnt know F/F buy and guarantee conventional loans over 80% LTV?!?!
You might be thinking of the fact that their charters preclude a guarantee exceeding 80%, which is true. But that doesn’t preclude them from buying & dealing in higher LTVs. To do so, a PMI company (e.g., MGIC, Radian, Essent) just has to commit to cover the ‘first loss position’ (eg., “20% cover”). This is all handled by automation via the originator, now. Click. Boom.
Still, F/F do NOT buy ‘purchase money’ loans over 97 LTV. But even at the 97 max, the buyers’ 3% down payment can now be a family gift, subject to underwriting approval.
Quote: “Yet we have contract rights in our shares? FHFA can vote our shares for us?”
Yes. But. The question of whether doing so would support a shareholder legal claim is IMO an unsettled one. The USG wants to name its haircut JPS price but prefers more leverage in the form of further rulings barring the front door (to name the “4–dog defense”: standing, failure to state a claim, HERA succession, and HERA anti-injunction). So they can just wait. IMO until a Fairholme-esqu case a survives a *final pre-trial dismissal motion*, the odds for Ps remain stacked. But I am rooting for Ps.
Now momentarily set aside HERA. There is also a ‘5th dog’: and he bites. Courts have a settled doctrine in federal takings of contract rights cases that is nearly impossiblr (the ‘4th branch’ makes its political living in large part by being empowered by Congress to interfere with third party contracts and rearrange private deals—all in ‘public interest’. Very common. If you want some related links lemme know.
That train has sailed.
Alito limited the remedy for compensable harm, *if any*, to acts taken (or wrongly barred) under a full Director.
The NWS was undertaken by an Asst Director. Not a full Director. So the NWS ‘in total’ is not reversible in this claim.
Alito made this very clear.
Gorsuch was the lone dissenting pen demanding a full reversal (IMO he makes good points, but for now the en banc Fifth is duty-bound to adhere to Alito’s majority as the new precedent).
HERA transferred that contingent right temporarily to FHFA as Conservator. The Director thus possesses the JPS right to vote (and IMO he would do so if triggered, but obviously just as a formality).
HERA does not require him to ask how you would’ve voted. And thanx to SCOTUS, as long as he acts within HERA authority, and his explanation rationally supports the public interest, such a decision survives an APA 702 challenge. So that legal door is nailed shut.
Still. Might a ‘Director-for-JPS vote’ be a new cause of action firm enough to support yet another claim? Maybe. Maybe not. I think the USG is delaying permanent F/F decisions until at least one of the two Fairholme cases resolves, one way or another. The losing party in COFC will apply for Writ of Cert with SCOTUS, who should decide by Xmas whether or not to hear it. And that will bear heavily on the recap timeline. So whatever future you want —we should see at last see the map reveal its hidden secrets (ala Harry Potter) by December 2022. Which is also after mid-terms.
Assuming SPS conversion, I assume you (as I) would still expect a reverse split?
That’s a possibility. Cannot deny it.
But upcoming court outcomes will have an effect on JPS too. Some like myself are overly cautious and even today hold no shares of any GSEs. But I remain interested and think a value buy may still be opportune. I personally an watching for some of the key legal disputes to advance just a bit further. 2022 may even surprise with several fireworks shows. We shall see.
I think Glen means, specifically, pre-judgment interest under common law, which can vary state by state. Contract claims are generally a creature of each state; Delaware’s code states 5% plus a kicker (last I saw).
Agree generally it *will* be simple interest, but…some courts have discretion to decide whether the interest should be simple or compound. See, e.g., Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 173 (Del. 2002) (although the Delaware Supreme Court explained that Delaware courts have "traditionally disfavored compound interest," it also noted that it is within a court’s discretion to award compound interest).
The majority of Americans, I don’t know.
As for myself I think rent control is a per se taking and should never have been allowed. But suspect I am a minority.
KT is correct. In Seila & Collins separation of powers cases SCOTUS faced a separate severance-type decision — not just with the offending clause (e.g., for-cause) — but whether the power itself could survive the change effected by the SCOTUS opinion. As KT intimates the court doesn’t always reveal all its thoughts, but in both Seila & Collins, its action (or perhaps its inaction, depending on your existential views) still has the same force of law. I suspect in Seila it was an analytical no-brainer that the CFPB should be able to go on issuing CIDs with or without ‘for cause’. CFPB can still issue CIDs. Of course.
It might have been a closer call on 4617(b)(2)(J)(2) had a different right been offended such as a first or sixth amendment right. But that was not the case. Moreover there is no guarantee that a constitutional claim alone would have standing(Collins deftly avoids that thorn). So FHFA can still make public-interest choices and choices against holders. As long as objectively rational even if bone-headed. Merry hristmas
Actually Carlos himself is omnipotent; he’s a first cousin of Q from the Continuum
Would that still work without a final resolution (whether a settlement, consent agreement or binding final court order on all material claims) ?
The new test for Removal of principal officers was laid out recently (in principle) in Seila Law by Roberts. In Collins, Alito’s opinion set it as controlling precedent.
This put an end to the old idea of trying to classify principal officers’ power by their functions (executive, quasi-legislative, quasi-judicial). To wit, in Seila, Roberts acknowledged *explicitly* that that old approach simply “does not track” how agencies are designed. (IMO the new test is neat also because it still retains the ad hoc balancing of functions *but relegates it to cases of inferior officers*.)
The test is simple, it asks: does a for-cause removal restriction apply to the head of a single-head agency, or, to the officials who lead a multimember agency?
Such restrictions are prohibited for a single-head, but allowable for multiple officials.
Congress can thus choose political accountability (at will single-head) or structural protections (e.g., FTC board) as a means of controlling agency power. But it cannot choose neither (See CFPB, FHFA).
Quote: “It would be very easy for a USCFC judge to say the same thing about the warrants, that the claim accrued when the original SPSPAs were signed. If that happens then the six-year statute of limitations in the USCFC expired long ago.”
Agree 100%. This has been my thought too. The idea that the norm is a right to wage a late-dated, cherry-picking war — one condition at a time without need of worry of a SOL, just strikes me as wholly inconsistent with the most basic of contract law underpinnings.
LOL. Story of my life.
Ya court red-lining of statutes is fraught with its own set of issues. The method may or may not be madness; but either way, it’s an entrenched madness.
I’m all for making FHFA more accountable. CFPB also has made too many bone-headed interpretive rules and prosecution decisions.
I’d make it a ‘two-for’: an omnibus act to fix both agencies. Dear US Senator, what the he*# are we waiting for?
SCOTUS set a precedent in Collins that lower courts MUST follow. A precedent includes an opinion on a controversy, and, a separate opinion explaining a judgment, the latter of which is better known as ‘remedy’.
In Collins, Alito’s remedy analysis (with *7 votes*) was old familiar ground: when deciding whether to just excise a clause, or, put the kibosh on a WHOLE statute, time & again, the same logic is repeated: ‘we think that given a choice at the law’s inception, Congress would’ve preferred the lawful statute (as we now explain it), to no statute at all’. That analysis —and the tiny number of relevant factors actually used by Alito in the lead opinion—preclude validity to the assertion you’re making. Whether Congress used the label “independent”,whether they insisted FHFA be run off budget, or whether it be run from a hidden base on the dark side of the moon, the fact remains that the agency structure had only 1 defect, and it was cured. If Congress wants to change things … so be it. But don’t leap to the conclusion that SCOTUS has any basis to do so. Been there, rejected that.
For Collins in the Fifth Circuit En Banc opinion following oral argument:
Yes, I think I would expect it by July. But there's always variables.
The good? Some of the usual dirty work is already done (Article III standing & a colorable claim) thanks to SCOTUS. That's a time-saver.
The bad? Well, Chef Alito whipped up a King Cake and air-mailed it back to New Orleans while it was only 'half baked'. He also attached a gift tag reading "Hi guys! The baby is in the cake, but split in 2 pieces. Sante!"
Today is National Donate Day. Well-timed.
Paste the citation link and I’ll review it.
Any claim based on execution of Warrants will be time-barred, due to statutes of limitations.
Correct. MF homes are personal property in about half the states. F/F can only guarantee mortgages on real property.
Robert. Yep. I know. I litigated hundreds of MH claims with some big fish.
You’ve not lived until you’ve visited an impassable mountain-dirt ‘driveway’ in Carolina, snaking up an alpine slope to a peak, whereupon you find a MF home’s DIY ‘addition’ had cracked and went over a cliff in a mud slide, pulling half the trailer along with it—leaving just its skirting. But I digress.
We hired auditors & found over 300 loans in 20 states that - by law - could not title the MF as a real property (rather it was via DMV). No one at the origination shops evidently found it odd that the title omitted the Alta 7 endorsements. Nor did GSEs spot check the title. So on most these cases the actual original LTV was not 97%, it was over 500% - lacking a dwelling of real property. Many were never resold after years of effort. Brought in wrecking ball guys. Total losses often > 100%.
I agree w/kthomp19
Agree with you. On the point of ('The debt won't need to be restructured because FnF have positive net worth'), also, I would posit that F/F debt won't be restructured because UST has expressly guaranteed they remain current while its commitments are in place.
If and When the UST commitment ends, I find it impossible to even imagine that a penny of F/F unsecured debt would go unpaid. Imagine a US debt rating downgrade; that alone would contribute significantly to a vote for replacing the dollar as world reserve currency. It's a nightmare of unimaginable consequences. I wish I could say it can't happen; but I used to think that about global pandemics. Consider me taken down 1
The alternative would risk the very nightmare scenario that Congress, POTUS, UST, FHFA (et al) ostensibly worked together so hard to avoid: namely, a downgrading of US debt, and -- invariably -- the dollar losing its annual GDP booster-shot from serving as world reserve currency.
In comparison, the Great Crisis would seem like little more than a dropped candle compared to this global nuclear-winter. Perish that t