Fannie Mae-No Politics (FNMA)

[obiterdictum]

This issue doesnt make a whole lot of sense. If Hera says that FHFA is to be an independant agency but the single director removal for cause is unconstitutional, the remedy is what?

The ruling made by the 5th Circuit Court of Appeals en banc was to declare that “for cause” removal limitation in 12 USC § 4512(b)(2) is unconstitutional. This was an en banc rendition of judgment. Count IV judgment was reversed and remanded to Judge Atlas' District Court for entry of judgment.

The court REVERSES the judgment as to Count IV and REMANDS that claim for entry of judgment that the “for cause” removal limitation in 12 U.S.C. § 4512(b)(2) is unconstitutional.

Once the entry of judgment is made the unconstitutional provision is void and unenforceable.

The remedy currently is prospective. Past harm and injury were not addressed. FHFA remains as an independent federal agency minus one statutory provision. All operations go forward as usual with the difference being that the FHFA Director can be fired at will by the President.

Collins et al. did not accept en banc judgment for Count IV. The Collins et al. petition for writ of certiorari specifically challenges prospective remedy and seeks retrospective relief through SCOTUS invalidating the net worth sweep by declaring the FHFA's single-director structure unconstitutional and by targeting specific provisions in HERA for elimination.

The questions presented are:
1. Whether FHFA’s structure violates the separation of powers; and
2. Whether the courts must set aside a final agency action [Net Worth Sweep] that FHFA took when it was unconstitutionally structured and strike down the statutory provisions that make FHFA independent.

The targeted statutory provisions are: 12 U.S.C. §§ 4512(b)(2), 4516(f)(2), and 4617(f).

If the POTUS can remove the director at will then FHFA is not an independent agency and will conflict with HERA.

No. The authority of the President to remove the FHFA Director at does not wholly define FHFA's status as an independent, federal, executive agency. Even though there is no definitive definition of an independent agency, it has been defined with two considerations. Regarding those two aspects:

1. FHFA is an independent federal agency since it is established outside the direct aegis of the Executive Office of the President (EOP) and the 15 executive branch departments. FHFA is not required to report to a higher official and does not need congressional appropriations to operate. In this way, FHFA is considered to be independent. HERA specifies what FHFA has to do with Congress.

2. FHFA has been an independent federal agency also because the Director had a for-cause removal statutory protection and by protection was insulated from any political interference by the President or elected officials in the Senate and House (The same goes for the CFPB).

So, if POTUS can remove the director at will then FHFA can still be an independent federal agency as defined in aspect 1.

The part of the second aspect (free from Congressional appropriations) is being challenged in the Supreme Court as well as insulation from judicial court action - the anti-injunction provision (12 USC 4617(f)).

Doesnt Congress need to amend Hera to create some new type of board of directors or commission to replace the single director?

No. There is no statutory need. As can be plainly observed, the FHFA Director can continue as before in the present statutory circumstances. Congress has no serious concern yet. And, if Congress wishes to amend HERA at any time, Congress can do so. Congress simply proposes and votes on a bill or bills that insert new provisions, strike existing provisions and/or strike old provisions and insert new ones.

If that is true, then everything administrative done by the FHFA should be voided including the conservatorship.

Frankly, that is an extreme opinion. But it can be asked: What is included in everything administratively done by the FHFA? Does that include everything ever done with the GSEs and/or the Federal Home Loan Banks? Is the agency itself is to be voided? How would that be accomplished without abrogating the rights of all involved? How would that sweeping solution affect the legal rights of all involved and how would the legal rights of all be equitably managed? An actual attempt to answer these questions can give an inkling of what judges and justices have to think and reason about in this case.

If this isnt so, could you explain why not? I’m asking big picture why. Not Rules of civil procedure type answer that obfuscates the bigger constitutional picture.

Yes. The Local and Federal Rules of Civil Procedure have little to do with legal reasoning, understanding, and interpretation of the various domains of law. Such rules and procedures also do not make an accounting of the actual, ongoing relationships and outcomes of harm, injury and benefit existing between FHFA, Treasury, Judiciary, Congress, the White House, GSEs and sets of shareholders filing lawsuits. Local and Federal Rules of Civil Procedure are not applicable here and cannot in any way obfuscate a bigger picture since invoking them would be inappropriate.

A dated big picture in diagram form is: https://investorshub.advfn.com/uimage/uploads/2017/2/19/jtybnGSE_Thought_Map_(2).png

This diagram can be updated with the addition of a few external corporations, organizations and institutions that try to influence the decisions and actions of main actors. These include external financial advisory firms for FHFA and the GSEs, TBTF banks and bank lobbyists, the media, and housing advocacy groups, financial industry players and the remaining inconsequential corporate entities and persons. The question mark can be removed since the White House, Treasury and HUD have provided Housing Reform plans.

The questions raised here concern are part of the big picture. Namely, the roles and possible future actions of the Judiciary and Congress on certain statutory provisions of HERA and the possible resultant impact on FHFA and GSE shareholders.

The roles, past actions, and current circumstances are unarguably clear now.

However, possible future actions to be taken in this part of the big picture by the players involved are uncertain.

The opinions of anonymous observers are usually inconsequential in the decisions and actions of the actual players in the picture. The decisions and actions of the actual players in this part of the big picture count.

A useful focus is to be carefully attentive to those actors who have actual authority and power to decide and act (Justices, judges, clerks, attorneys for the plaintiffs and defendants (shareholders, Mnuchin, Calabria) and certain lawmakers. Since these minds cannot be read and there is little direct ongoing access to the actual players, actors in this picture, imagination and speculation substitute for fact and certainty. That is the way it has been and is. Outsiders looking in and trying to make sense of the current circumstances with inadequate information.

Seems to me HERA will need to be amended if Supreme Court were to rule in favor of the plaintiffs.

That is one possibility. There are other possibilities as already demonstrated by a 5th Circuit en banc majority.

Otherwise Supremes would need to rule that a single director head of an independent agency is a new kind of super executive branch of the US with certain powers equal or in excess of POTUS.

That is not likely to happen due to the predominance of conservative justices and Article II Section 1 Clause 1 and Section 2 Clause 4 of the US Constitution wherein it is stated that:

"The executive Power shall be vested in a President of the United States of America"

and

" and he shall take Care that the Laws be faithfully executed." See: https://constitutioncenter.org/blog/article-ii-the-executive-branch

On the other hand, maybe SCOTUS will lean towards making rulings that favor pre-socialist or socialist ideologies. What are the chances of that occurring?

Wait and see. Like a roll of dice, outcomes will appear.