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"It is not the right thing for a government agency to “push the
envelope” when that means trampling on procedural
and substantive rights of others, or otherwise flouting
legal requirements. And it is not enough to say that
the judiciary stands ready to guard against these
abuses; the entire purpose of separation of powers is
to help prevent such abuses from occurring in the first
place. Clinton, 524 U.S. at 450 (Kennedy, J.,
concurring) (“Liberty is always at stake when one or
more of the branches seek to transgress the
separation of powers.”)."
"While no doubt even the most scrupulous, closely
monitored government agency will err from time to
time, lack of accountability to Congress and
ultimately the people through the appropriations
process makes it more likely—not less—that such
improper conduct will occur. This is exactly what the
separation of powers was designed to protect against."
CONCLUSION
Consider the following scenario: An acting
director of a federal agency—someone confirmed by
the United States Senate for another position, but not
the role he was serving at this moment—walks into
the front door of the Federal Reserve and presents a
handwritten note to the receptionist:
Please put $800,000,000 into the account of
the Consumer Financial Protection Bureau at
the New York Federal Reserve.
Thank you.
John Michael Mulvaney
Acting-Director, CFPB
In response, the Federal Reserve not only moves
the money, but does so without inquiry of any
sort. And most certainly without any referral of the
matter to Congress.
That very nearly happened in 2018. And the fact
that it did not had absolutely nothing to do with a
concern about what the law required; in fact, the
relevant statute allows this.
But the constitution does not.
“By structuring the Bureau the way it has,
Congress established an agency primed to ignore due
process and abandon the rule of law in favor of
Bureaucratic fiat and administrative
absolutism.” Semi-annual report of the Bureau of
Consumer Financial Protection (Apr. 2018) at 1–2
(Message from Mick
Mulvaney), https://financialservices.house.gov/upload
edfiles/hhrg-115-ba00-wstate-mmulvaney-20180411-
sd001.pdf. The structure, funding, and operation of
the Consumer Financial Protection Bureau is the
exact kind of unchecked executive adventurism the
Framers sought to avoid by obligating Congress, and
Congress alone, to regularly appropriate funds for use
by the executive.
The Bureau’s funding structure is
unconstitutional and the holding from the Fifth
Circuit should be affirmed.
Respectfully submitted,
ERIC BLANKENSTEIN
LAW OFFICES OF ERIC
BLANKENSTEIN PLLC
1701 Pennsylvania Ave.,
NW, #200
Washington, DC 20006
eric@blankensteinlegal.com
BRUNN W. ROYSDEN III
Counsel of Record
FUSION LAW PLLC
7600 N. 15th St.,
Suite 150
Phoenix, AZ 85020
(602) 315-7545
beau@fusion.law
Counsel for Amicus Curiae Mick Mulvaney
Demarco (and Watt) COULD HAVE given in to the Obama Administration's demands to fund BILLIONS in Mortgage Loan Forgiveness and the US Congress was virtually powerless in using their Appropriations Clause Power to reign in the Agency, the CFPB funding mechanism possesses the same problem:
"III. The Bureau’s Lack of Accountability to
Congress Has Contributed to Its Improper
Conduct.
Under normal circumstances, Congress’s
appropriations power acts like a sword of Damocles
hanging over the agency; the agency knows that any
misstep could have serious budgetary ramifications,
so it strives to act in a manner that is reasonable and
will not provoke Congress to act. But the Bureau does
not operate under normal circumstances.
Since the Bureau need not worry itself with
whether Congress approves of its actions, it
repeatedly has acted as one would expect from an
unaccountable government agency: without regard
for the law or the rights of those it is pursuing. As a
former Deputy Director of the Bureau put it, the lack
of oversight by Congress “tempts directors into
pursuing initiatives that bear little relation to the
priorities of the American people nor the boundaries
of statutory authority.”
Like the CFPB, the FHFA has this feature as well in HERA (I added BOLD): "Further, the CFPB funding mechanism insulates
Congress from the accountability it should have to the
people. Voting for (or against) an agency’s
appropriation—or permitting or prohibiting funds for
a particular use—is a statement approving (or
disapproving) of how that agency is conducting itself.
It was, in fact, concern about “Congressional
pressure” exerted “through the annual appropriations
process” that motivated the 111th Congress to insulate
the Bureau from that process entirely. S. Rep. 111-
176, at 163 (2010). But the ability of the people’s
representatives to influence how the executive
conducts its business is a feature of our system, not a
bug, even if the 111th Congress thought otherwise."
----Mick Mulvaney's Amicus Brief on CFPB case, Oral arguments scheduled for October 03, 2023 @ 10am EST
I'm loving the 'intellectual dividends' of this unique and fairly bizarre fact pattern of the last 15+ years, but yeah, I want our Corporations back from the clutches of Uncle Suggy !
GLTA!
TH last Thursday: "I don’t know of any important trade group that still is advocating for “winding down and replacing” Fannie and Freddie–probably because after ten years of trying, no one had been able to come up with a better alternative to them (and several of the alternatives proposed were comically bad). Nor are any publicly supporting perpetual conservatorship, although their postures of “making the perfect the enemy of the good” ends up with that as the result."
SM recognized that early in 2017, letting the Executive Branch have the Power of the Purse is contrary to the Seperation of Powers and is ripe for opening up abusive Executive Branch overreach as the NWS and the CFPB case demonstrates:
"As Justice Kennedy once observed, “[m]oney is the
instrument of policy and policy affects the lives of
citizens. The individual loses liberty in a real sense if
that instrument is not subject to traditional
constitutional constraints.” Clinton v. City of New
York, 524 U.S. 417, 451 (1998) (Kennedy, J.,
concurring)."
"This arrangement is contrary to the separation of
powers that informs our whole system of
constitutional government. The Framers placed the
power of the purse in the hands of Congress, and only
Congress, to check executive overreach. Further, they
required Congress to provide appropriations for
executive actions to make Congress responsible for
what government does. This separation of powers was
designed to foster accountability and protect the people from out-of-control government."
"How the CFPB is funded is contrary to the
separation of powers that undergirds our entire
system of constitutional government. It gives a single
director control over hundreds of federal workers and
hundreds of millions of dollars. It deprives Congress
of any meaningful oversight of one of the most impactful federal financial services regulators. By
extension, it denies the American citizenry the
opportunity to effect change, even if a majority of
them want to do so.
By simple virtue of the Bureau’s funding
mechanism, then, it is one of the most opaque, least
transparent, and potentially most abusive agencies in
the federal government.
Concern about abuse is not just theoretical; in
ways both large and small the CFPB encroaches on
the liberty of the people, violates their statutory and
procedural rights, and otherwise flouts legal
requirements. Following the constitutionally
required appropriations process would not guarantee
against these violations, but it should help restrain
the CFPB’s worst impulses. This is because it has
done so in the past with other agencies; in a closely
analogous example, Congress used its spending power
to rein-in an overexpansive interpretation of
“unfairness” by the F.T.C."
----Mick Mulvaney, former Acting Director of the CFPB, Amicus Brief, Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited
Oral arguments Oct 3, 2023 @ 10am
Watt and SM were at loggerheads over the upcoming Tax Hit the twins would take solely as a result of a new tax law passed early in the DJT administration, right?
https://www.bloomberg.com/news/articles/2017-05-18/mnuchin-may-face-fight-with-watt-over-fannie-freddie-dividends?embedded-checkout=true
"Treasury Secretary Steven Mnuchin is on a collision course with the U.S. regulator for Fannie Mae and Freddie Mac after telling lawmakers that he expects the mortgage-finance giants to continue paying dividends to the government.
Mnuchin’s comments at a Senate Banking Committee hearing Thursday came a week after Federal Housing Finance Agency Director Mel Watt told the panel that he might tell the companies to withhold money to build buffers against potential future losses."
I suspect decision makers in DC will have an easier time considering exit from the Conservatorships the higher the organic Retained Earnings Capital Rebuild.
Why fart around with the plumbing of the backbone of the US Housing Finance Market when Americans financial well being and nest eggs are at stake?
------
"U.S. household wealth rises to record $154.28 trillion in second quarter
Provided by Dow Jones
Sep 8, 2023 1:29 PM EDT
By Greg Robb
Surge in stocks and real estate values fuel increase
The numbers: Total U.S. household net worth rose $5.5 trillion to a record $154.28 trillion in the second quarter, the Federal Reserve said Friday. This is the third straight quarterly increase.
Key details: The gain was boosted by a $2.6 trillion gain in stocks. The value of real estate holdings rose $2.5 trillion in the three months.
Household debt rose at a 2.7% annual rate in the second quarter. Mortgage debt grew at a 2.8% annual rate.
Big picture: The health of the consumer has been a big factor in the surprising strength of the U.S. economy this year. Talk of a recession has vanished and the economy seems to be strengthening as the year progresses."
https://www.morningstar.com/news/marketwatch/20230908441/us-household-wealth-rises-to-record-15428-trillion-in-second-quarter
Takes TWO TO TANGO and POTUS couldn't fire Watt, so Watt, as the Director of an Independent Agency could decide how he wanted.
All the FHFA Directors (including SLT) called for 'the reduction of the footprint' of the GSES on the US Secondary Mortgage Market.
In fact, the impetus of the misguided August 17, 2012, 3rd Amendment, was to 'Wind Down' the GSES and an accelerated reduction in the GSES Mortgage Portfolios held on their Assets side of the Balance Sheets.
11 years later their market share of the US Secondary Mortgage Market has increased substantially.
FDR worked in the Woodrow Wilson Administration and he went full blast with the Wilsonian ideals of elevating the Administrative State (aka the 4th Branch of Government) during his unprecedented 12 YEARS AS POTUS.
Fannie Mae was one of those Gubmint Agency's.
https://www.c-span.org/video/?282567-1/traitor-class
Start at MM 9:00
"Devin Watkins, an attorney at the libertarian think tank Competitive Enterprise Institute, told lawmakers: "There are other agencies out there that do have non appropriated funds, and Congress should review those as well and think about how to return those agencies to congressionally funded appropriations process as well."
I know of one in particular !
https://www.businessinsider.com/student-loan-forgiveness-debt-relief-borrowers-cfpb-scotus-2023-9
Seemed like Margaret was suggesting that as a possible road map for the Plaintiffs.
My favorite Sweeney quote: "Making an offer the Board couldn't refuse!"
As Gary Hindes said the other day, it seems that the Shareholders have the moral high ground here.
We've come along way from the US Governments desire in the Geithner/Demarco years to "Wind Down" the GSES, morphing into a slow but gradual "There Is No Alternative" realization with at least some daylight as to exiting the Conservatorships, and having the Government do what they should have been doing since the beginning - following HERA and releasing the GSES.
We'll see what happens...
"He pledged significant headway on an overhaul within “six to 18 months.”
Think how much further along we would be BUT FOR the Unconstitutional HERA provision.
His Dad, Bush 1 disliked the twins as well! Most of that side of the aisle can't stand 'gubmint interference' in the 'free markets'.
Plus, historically I believe that Fannie Mae was a government response to the Great Depression to help low and moderate income Americans, another FDR creation.
As I recall, when I worked at Fannie Mae between 88-93, Bush 1 wanted to tack a 10 basis point or 25 basis point fee on each enterprise. James Johnson (RIP-Mondales Campaign Manager) was the CEO and via sheer Political Lobbying nixed it.
The TBTF banks are LOVING the Status Quo! Arguably they are in need of profitable lending due to the mismatch in duration of their assets and liabilities as evidenced by their $1/2T+ in unrealized losses that they continue to ignore and don't have to under FASB and/or bank regulations.
Right now, the Spread between the 10 year Treasury and the 30 year Fixed Rate Mortgage is approximately 300 bps or 3.00% - JUICY, from a historical perspective:
https://www.google.com/amp/s/www.cnbc.com/amp/2023/07/17/mortgage-rates-arent-sending-signal-homebuyers-need-on-affordability.html
Hard working American Families struggling to buy their 1st Home? No bueno!
The problem is that it seems unlikely that the 'instant recap' scenario will unfold quickly. In the meantime the twins have about 1%-1.5% Retained Earnings Capital and so far its increasing each quarter.
Why no 'instant recap'?
(1). After 7 years of CASH SWEEPS to the UST Coffers, the twins Balance Sheets have been drained and monoline insurance companies need a Capital Buffer.
(2). Multi Billion Dollar Litigation just takes time.
(3). SLT and Yellen have a cover story for the Status Quo - No one's complaining, the TBTF banks are seeing 3% spreads on 30 yr Fixed Rate Mortgages over the 10 year Treasury. SLT and JY can continue with the "We're waiting on Congress to decide the future of the US Housing Finance Market".
(4). Getting UST and FHFA to agree on the Exit from the Conservatorships could leave them with more questions than answers and waiting for more organic Retained Earnings gives them more options.
I'm as sick of this garbage as you are, but it just doesn't seem like it's going to happen soon, I've been wrong before!
What do you think?
Well, the remedy that the Collins Plaintiffs are asking for would put the Shareholders in the same position they would have been in BUT FOR the Unconstitutional HERA provision.
Here, it's alleged in the Collins Compliant that DJT would have 'fired that political hack Watt' and 'replaced him on Day 1 of his Presidency' and proceeded to exit the Conservatorships.
The ONLY way to do that would be to eliminate the Bailout funding as paid and 'make Billions for Taxpayers by exercising the Warrants or deal with the LP by converting it to common.
I think Plaintiffs Attorney Barnes was saying that they were looking for the Court to either: (1) Consider the Bailout $ from the Government paid by the Corporations or (2) Convert the LP to Common.
They're argument I believe, is: (1) DJT wanted to get them out of the Conservatorships (2) the ONLY way to do that is to resolve the Bailout funding and (3) the Unconstitutional HERA provision prevented DJT from his goals of release, BECAUSE IT TAKES TWO TO TANGO (i.e., BOTH the FHFA Director AND the UST Secretary have to agree to it.
The Gubmint says, "No way Jose, DJT controlled the UST, and Mel 'Chase me some skirt around the office' Watt would have JUMPED AT THE CHANCE to release them, IF the UST offered to resolve the SPSA's."
Hard to tell exactly how the 3 Judge Appellate Panel will rule, but I thought that the Plaintiffs Attorney made some good points about the Court in this case Jumping to Conclusions and ruling against the Plaintiffs on a Pretrial Motion to Dismiss BEFORE even hearing the Evidence in a trial.
This is what happened in Collins at the SCOTUS, were the 9 Justices (without hearing a SHRED OF EVIDENCE) ruled that the FDIC copy and paste HERA, allowed the FHFA to "act in its best interests and by extension the public it serves".
AFTER hearing all the Evidence, 12 random Jurors found that yes the FHFA breached the Implicit Contract between the Corporations and the Shareholders, in the Lamberth trial.
The Collins Plaintiffs request today was simple, don't prematurely jump to conclusions without hearing all the Evidence first!
Seriously, if you look at just how well the Multifamily Book of Business contributed and continues to contribute to earnings EVERY Quarter, you will see that it's a very important part of Fannie Mae and Freddie Mac. The MF Book of Business performed with sheer excellence and virtually was unscathed during the Great Financial Crisis.
A future problem or risk is that unlike the Single Family Book of Business (which is 85%-90% Fixed Rate 30 and 15 year Mortgages), the Multifamily Book of Business has Mortgage Rates that typically reset to the Market every few years (that is they act like Variable Rate Mortgages).
BA in his hour long interview said that IF future market long term Mortgage Rates remain elevated around 7% - 8%, these resets could pose significant default risks as Commercial Real Estate investors would be in Violation of DCR's (Debt Coverage Ratios) and find it nearly impossible to refi.
Compound the problem with massive RENT CONTROL limiting the ability of MF Investors to charge Market Rents and we got ourselves a potential hit to Capital and a longer and longer Capital Rebuild period and eventual release from the CONservatorships!
Take a look at the 10q's, the strengths and/or weaknesses of the Multifamily residential market is very relevant to Quarterly Earnings of the GSES and the Top line Revenue Numbers for the Multifamily Book of Business goes to Net Income, Cap Rates, and ultimately default rates.
Did you know that Fannie Mae and Freddie Mac employ over 1,000 people that work Full Time in running their Multifamily Book of Business?
Read the 10q's.
Real estate investors may be able to charge more indirectly via fees added to the tenants base rent, as this article demonstrates, (but the People's Republic of Montgomery and Prince George's County Council Members may have regulated this as well):
"Landlords are hitting tenants with an abundance of fees every month. Many are no more than $5 or $10 each, but when stacked up they can amount to hundreds of dollars more each year. Some fees, such as those for parking and pets, have been around for years, but many renters now pay up for things they were rarely charged for in the past.
That includes fees for trash pickup, pest control, the use of a mailbox, and for making routine maintenance requests. Then there are fees for move-ins and move-outs and for "lease administration." One Minnesota landlord collected a $100 so-called January fee the first month of each year, though it isn't clear what tenants got in return for that charge.
In suburban Phoenix, buildings increasingly charge for valet trash pickup that can add more than $30 to the monthly rent. "I can carry the trash 50 feet to the dumpster," said Debbie Giannecchini, who moved out of a building that started charging the fee.
Apartment asking rents rose 25% between early 2021 and summer 2022, straining the budgets of many renters whose wages didn't keep up. While rent growth has since flattened in much of the country, large property-investment companies continue with these add-ons to boost their bottom lines.
The five largest single-family-home rental landlords increased their annual fee income per lease by about 40% between 2018 and 2021, according to a report last year from the House of Representatives Committee on Financial Services, which obtained fee data from the companies.
"A lot of this stuff used to just be called 'rent,'" said Mike Vraa, a Minnesota tenant attorney. His organization, HOME Line, keeps a running list of newly discovered species of rental fees."
More Rent Control, like Nationalizing Private Companies, it will end up reducing supply, discouraging investment, and increasing prices higher than necessary.
From the WSJ, "Some suburbs are trying to rein in the recent upswing in rents. In both Prince George's County and Montgomery County, Md., near Washington, D.C., local governments this year passed rent-stabilization laws that limit annual rent increases. Montgomery County Councilmember Natali Fani-Gonzalez called the policy "a permanent solution to protect tenants." Pasadena, Calif., near Los Angeles, passed a rent-control law last year."
Does Mr. Market prefer Fannie Mae over Freddie?
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1
HeeeeHeeee! Easy Gump! Genius is okay, Super Genius or Drill Sergeant, Sir! is much much better!
One of the many problems of Nationalized Corporations: "For the third time in four years, Freddie Mac is looking for a new CEO."
What about the "DEATH SPIRAL" ? !
So ZERO compensable harm to Shareholders from the Unconstitutional HERA provision that prevented Trump from firing Watt on Day 1.
Do you really believe that?
Didn't the USSCT remand this to deliberate the FACTS or was it remanded to ASSUME FACTS and Dismiss prior to an actual trial?
How much more in Retained Earnings would be on the books as Capital if the 4th Amendment was implemented in September 2017, instead of 2019?
"We have to make clear that (Conservatorship) is transitory otherwise it will be viewed as a Nationalization" President Bush to Treasury Secretary Paulson, Thursday, September 4, 2008, in the Oval office.
Let's try the facts on remand, not jump to conclusions without developing and listening to the actual evidence first!
What did you think, Van?
Michael J. DeVito's resignation letter: "Dear Gubmint, call me when "Congress decides on the future of the US Housing Finance Market", meanwhile I'm going to make some real money in the private market."
You know, Marjorie Merriweather Post (her Dad was CW Post, the owner of Grape Nuts Cereal), was married to E.F. Hutton and she bought Birdseye Frozen Foods company, because "When E.F. Hutton talks, people listen"
https://www.ai-bees.io/post/marjorie-merriweather-post-1900s-feisty-female-mogul#:~:text=The%20couple%20enjoyed%20and%20commandeered,products%2C%20including%20Birdseye%20Frozen%20Foods.
"...the jury's unanimous verdict should make clear that shareholders posses the moral high ground here."
Well said, Mr. Hindes!
Grácias, Señor!