Fannie Mae-No Politics (FNMA)

[Nelson478]

HERA Statutory Power Improperly surrendered to Treasury

If you head over to FHFA's website and look at the documents for the Senior Preferred Stock Purchase Agreements you will find something interesting that continues to not yet be specifically litigated. The legal argument relates to if FHFA has the authority to alter the statutory context of HERA (and adherence therein) through a Seller/Purchaser agreement by way of contract law.

The FHFA and US Treasury (UST) agreement documents are located here:
https://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx

If you look at the original agreement section 5.3 (which does not appear to be altered in subsequent amendments), you will find the following language:
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/2008-9-26_SPSPA_FannieMae_RestatedAgreement_N508.pdf


HERA specifically grants FHFA powers of conservatorship and no other agency. However the SPSPA agreement with UST contractually prevents FHFA from terminating conservatorship without prior written consent from UST, notwithstanding the FHE Act.

Question: Can FHFA legally surrender over to UST its statutory authority under HERA to decide when conservatorship ends? Where in HERA does it permit FHFA to transfer the power to terminate conservatorship from FHFA to another agency? It doesn't. FHFA is not authorized by HERA to "sell off" its powers to another party by way of contract. FHFA, per HERA, is to be an independent regulatory agency.

No one has litigated this, yet. After the En Banc ruling is released, which is likely to be a published opinion that sets precedent, where do you think the next hole will be poked?

FHFA is not authorized by HERA to sell via contract its statutory powers of conservatorship decision making to another agency. Result: This aspect of the FHFA/UST SPSPA contract can be challenged. The house of cards is falling.