FHFA is bound by the regulations it put for the entities they control, and they cannot make different rules for same industry participants, so although it seems he can do whatever pleases him, the rules put out will be mandatory for all similar situated companies
The minimal capital cannot be altered as the CCF also says 2.5% is sufficient, and Ginnie only had 2% minimum, chances it can be lifted to 3% are near zero, the risk based is the only one that will be altered imo
Critical 1.25%..................is for Fannie .$42B for Freddie $28B
Minimal 2.5%..................is for Fannie .$84B for Freddie $56B
Risk-Based 2.8%..............is for Fannie .$94B for Freddie $63B
New Risk-Based 3.40%?.is for Fannie $114B for Freddie $77B
New Risk-Based 3.75%?.is for Fannie $126B for Freddie $85B
(Fannie 3.367498T)
(Freddie 2.265T)
In the lawsuits you start at the top of the latter, but the scope is different then you state, the 3th amendment will un-raffle the whole conservatorship, it is a very sophisticated demand and much more detail needs to be given to it, if the 3th is unlawful(and it already is until overruled) the contract needs to be altered and is voidable, and FHFA as world class regulator of course can only choose the side of Fannie and Freddie and void it completely as that is what the contract states, as by implementing the 3th amendment they breached contract, fiduciary duty, and good and fair dealing and Treasury’s Conduct Was Arbitrary and Capricious, and Conduct Exceeded Its Statutory Authority, and Conduct Exceeded Its Statutory Authority As Conservator, so the claim looks like a NWS sweep only claim, but in fact the claims is about the conservatorship misbehavior, that is why jones days plaintiffs and Washington Federal plaintiffs don’t want to loosen up on the direct claims and State that the interlocutory appeal does not set aside the direct claims, as they want to keep those claims and keep the door open to it, because other court outside Sweeney’s court sofar have proven they do not obey the law and it can be altered in the advance of the government, this of course is a no go, but Sweeney want to make sure there is no double recovery, so until there is a clear understanding between the direct claims and derivative claims, the lawsuits cannot proceed, ones Sweeney permits the direct will have standing after interlocutory appeal it can proceed, then if the other courts interpreted the law frivolously as they done before they can come back to Sweeney and ask for relief on constitutional grounds. So as of now both the FHFA and FHFA-C have fiduciary duty to void the contract as it is there obligation to the law to do so, unless of course overruled by court order, but those are the current hurdles FHFA faces, it ain’t pretty but that is the law, and when you cross that line those are the consequences, you can preach you don’t have fiduciary duty but in the end of the day you do, the FHFA is a conservator and if you do not do your job it is costly
Under dispute is the 3th amendment and it is already ruled illegal, so it needs to be overruled to become legal again, and that is not the only thing under dispute, I didn’t see the sealed second amended complaint of Fairholme, but it is sealed so it probably contains something the government want to hide
in HERA it states 4617(a)(1) “Notwithstanding any other provision of Federal or State law, the Director may appoint the Agency as conservator or receiver for a regulated entity”
then 4613 says
(a)Enterprises For purposes of this subchapter, the critical capital level for each enterprise shall be the sum of—
(1) 1.25 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles;
Then it means after 1.25% FHFA is out, 4613 is the “any other provision” and it nowhere in the laws says the exit of conservatorship is upon the wishes of the director, however if you find something in the law please let me know
the bank like capital is wishful for the FHFA and for stage crafting only, Fannie and Freddie are not banks so their capital is not going to be bank like either, but for public comparison reasons and stage crafting he wants it to be, so he will submit a less bank like capital rule and advertise it as bank like
The Supreme court can strike down or keep HERA in place, not a problem, only it would be more logical or cheaper to delete HERA in its entirety as the outcome either way will be the same when altered, it will be the OFHEO standard, you can call it HERA or OFHEO whatever pleases you, but it will have the same power only a different names
Legal is only what the constitution says and not what the court says, the constitution says
the separation of power has 3 branches:
1) Legislative Power (the power to pass laws) to Congress
2) Executive Power (the power to administer the laws) to the President
3) Judicial Power (the power to interpret and enforce the laws) to the Courts.
Any ruling that forbids actions between the 3 points is unconstitutional unless the constitution is changed of course, but don’t count on it it ever will, chances the court rules in favor of the constitution are 100% and thereby plaintiffs demands are granted
The fifth circuit changed the removal clause only and thereby HERA needs to be altered, it is not the job of the 5th circuit to alter HERA, they only concluded for cause is not constitutional, and when the director is removable it is no longer an independent agency but an executive agency and HERA accordingly needs to be changed in a way that it becomes OFHEO
