from Judge SWEENEY - BOD was given a HOBSON's CHOICE !
Quote:
64. On September 6, 2008, FHFA and Treasury persuaded the Companies’ boards to consent to conservatorship. As Former Secretary Paulson has explained, Treasury was the driving force behind the imposition of the conservatorships:
“FHFA had been balky all along about the imposition of a conservatorship . . . We had to convince its people that conservatorship was the right thing to do,
while making sure to let them feel they were still in charge.”
HENRY M. PAULSON, JR., ON THE BRINK 6 (2010).
Given that the Companies were not in financial distress and were in no danger of defaulting on their debts, the Companies’ directors were confronted with a Hobson’s choice: agree to conservatorship, or they would face “nasty lawsuits” and Treasury would refuse to provide the Companies with any capital if they needed it.
THE FINANCIAL CRISIS INQUIRY COMMISSION REPORT 320 (Jan. 2011). The Agencies ultimately obtained the Companies’ consent by threatening to seize them if they did not acquiesce and by informing them that the Agencies had already selected new CEOs and had teams ready to move in and take control. In agreeing to the FHFA takeover, both Companies’ boards understood that the “conservatorship” FHFA and Treasury proposed would be like all other federal conservatorships in American history and that the Companies would be operated by their regulator acting in a fiduciary capacity for the benefit of all stakeholders, including private shareholders. See: p. 26 -
