Fannie Mae-No Politics (FNMA)

[obiterdictum]

1. What is the consent decree narrative?

The GSEs can emerge from conservatorhip under a court settlement with no stipulated court adjudication.

YanksGhost, how is the single statement above equivalent to a narrative, by any definition of that term? This appears to be a paraphrase and an interpretation of ACG Analytic's tweet:

In discussion at @MasonLEC, @FHFA Director @MarkCalabria publicly indicated #GSEs could leave conservatorship before hitting top capital threshold and operate under consent decree.

In discussion at @MasonLEC, @FHFA Director @MarkCalabria publicly indicated #GSEs could leave conservatorship before hitting top capital threshold and operate under consent decree. pic.twitter.com/N5a4IvYdLs

— ACG Analytics (@ACGAnalytics) October 10, 2019

A consent decree is enclosed in an injunctive order of the court, signed by the judge, and entered as a court judgment. So there is adjudication. A settlement agreement (not a consent decree) lacks such a court-ordered injunction. In a settlement agreement, there are stipulations of dismissal requiring the signature of a judge without requiring a court judgment order.

As may be known, both GSEs operated under consent orders in the past. Freddie Mac operated under a consent order issued by OFHEO on December 9, 2003, that required Freddie Mac to implement recommended corporate governance practices and other remedial steps (https://bit.ly/2VJguiy). Fannie operated under a consent order issued by OFHEO on May 23, 2006 that required the Board of Directors and senior management to take steps to improve corporate governance, establish policies and procedures to ensure appropriate oversight, follow a OFHEO capital restoration plan, limit mortgage portfolio assets as directed, follow new personnel compensation rules, and a host of other matters (https://bit.ly/2q7m2rg).

1) Considering the above past history of the GSEs "operating under consent orders," 2) the reported and unelaborated statement of Calabria ("operate under consent decree"), 3) the statutory authorities of the FHFA Director to stipulate consent orders for the GSEs in conservatorship, and 4) the interchangeable use of the terms consent order, consent decree and settlement agreement, how was it determined that Calabria referred to a single legal settlement type (consent decree vs. settlement agreement) related to multiple plaintiffs with differing complaints and prayers of relief, in three different levels of court (District, Federal Claims and SCOTUS) and not to a FHFA stipulated consent order with the GSEs?

2. Who created a consent decree narrative?

That appears to be Mark Calabria.

It is reported by ACG Analytics that Mark Calabria made an unelaborated statement of 12-13 words in answer to a question as verified by nats1. Beyond that statement, a Calabria narrative was not found. There also is some ambiguity about the meaning of "operate under consent decree" as noted above.

3. What is troubling about the consent decree narrative?

I find it quite remarkable that after YEARS of legal wrangling involving massive amounts of likely billable hours that some resolution may emerge that assigns no blame for shareholder abuse since 2008.

If indeed a consent degree or settlement agreement does indeed occur (rather than a consent order between FHFA and GSEs), is it not usually the case that there will be no admission of liability or wrongdoing?

In negotiations, defendants can insist on a non-admission-of-liability or wrongdoing clause. Plaintiffs, in response, may insist on more details concerning the relief sought and its implementation. These are comprises made to achieve what the parties want.

Should not such an outcome be expected and unremarkable given the everyday operations of the civil justice system?

Consider the FHFA Private Label Securities Actions Settlements:
https://bit.ly/2VIswbT

Here is a link to a $5.1 billion FHFA settlement agreement with J.P. Morgan Chase & Co that contains a non-admission of liability or wrongdoing clause as well as stipulations of voluntary dismissal with prejudice. For stipulations of dismissal see pp. 6-8, 20 and 25. (https://bit.ly/31mDe9q).

Here is the non-admission of liability or wrong-doing clause:

4. No Admission

(a) This Agreement does not constitute an admission by any of the JPMorgan Defendants of any liability or wrongdoing whatsoever, including, but not limited to, any liability or wrongdoing with respect to any of the allegations that were or could have been raised in the Actions. The Parties agree that this Agreement is the result of a compromise within the provisions of the Federal Rules of Evidence, and any similar statutes or rules, and shall not be used or admitted in any proceeding for any purpose including, but not limited to, as evidence of liability or wrongdoing by any JPMorgan Defendant, nor shall it be used for impeachment purposes, to refresh recollection, or any other evidentiary purpose, nor shall it be construed as, or deemed to be evidence of, an admission or concession that Plaintiff, the GSEs, or any other person or entity, has or has not suffered any damage, or that the JPMorgan Defendants bear any responsibility for any alleged damages; provided, however, that this paragraph shall not apply to any claims to enforce this Agreement.

(b) Nothing in this Agreement shall be used as an admission or concession that JPMorgan Chase Bank, N.A., or any other JPMorgan Defendant, contractually assumed or is otherwise liable for any alleged liabilities or wrongdoing of Washington Mutual Bank (“WMB”), or otherwise waived any alleged contractual right unless expressly released herein or expressly released in any related agreement. p. 6 -
https://bit.ly/31mDe9q

Here is a link of how the settlement was released to the press: https://bit.ly/33sE9Gs

All just my opinion.

Understood.