A sort version by Tim Howard
Timothyhoward
NOVEMBER 29, 2019 AT 1:43 PM
I’ve now finished reading the entire 392-page transcript of the Oral Argument in the Defendant’s Motion to Dismiss the various lawsuits in Judge Sweeney’s Court of Federal Claims, and agree that the Washington Federal case—the only one which challenges the 2008 conservatorships—is likely to survive the motion to dismiss. The government made two arguments for dismissal—that the Washington Fed suit needed to be filed within the 30-day window applicable to the companies were they to have challenged the conservatorships, rather than the general six-year statute of limitations that applies to the other suits, and that the Washington Fed plaintiffs had failed to state a valid takings claim. My reading of the transcript is that Sweeney will side with the plaintiffs on both issues, allowing the Washington Fed suit to continue.
Most if not all of the suits against the August 17, 2012 net worth sweep are likely to survive as well. Sweeney all but said as much when, just prior to breaking for an afternoon recess, she said, ““I want the parties to have their day — well, we’ll have many days in court, but I mean, for this initial oral argument…”.
I also was struck by Sweeney’s clear and direct statements about how she sees the merits of both the 2008 conservatorship challenge and the 2012 net worth sweep. On the former she said, “I’m very concerned that Treasury approaches the board of directors of the enterprises and says, you either agree to the conservatorship or you’re out. That’s – that sounds like undue influence, if not a death grip,” and “The enterprises were never able to repay the debt to the United States taxpayer… and so the– Freddie — the enterprises were never able to right their financial ships of state and then make their profits while not borrowing anything from the U.S. taxpayer and then pay what dividend they can to their shareholders. And that doesn’t seem cricket. That doesn’t seem cricket to the way our government operates.” She was even more unambiguous in her description of the net worth sweep: “I hate to say it, I’m not — this is going to sound so flip, and I don’t mean for it to, but this is like the mob. And it’s not, of course, but, I mean, you have all the money is being turned over to the Treasury.”
The substance and tone of Sweeney’s comments throughout the hearing was strikingly different from we’ve noted in the recordings or transcripts from other cases concerning Fannie and Freddie, and of course there’s a reason for it. All of the proceedings so far have dealt solely with issues of law, and the government has consistently given a false rendition of the facts leading up to and surrounding the companies’ initial placement into conservatorship as well as the subsequent net worth sweep. Judge Sweeney permitted discovery in her case, and she therefore has become intimately familiar with the facts, which to put it mildly do not favor the government. Sweeney’s view of the merits of the case thus is not just a harbinger for how she might rule if the cases in her court ever make it to trial, it’s a foreshadowing of how the judges in other cases likely will react once they focus on the actual facts of the issues they’re being asked to adjudicate.
AI
