Fannie Mae-No Politics (FNMA)

[Ripcord01]

The outcome.

1) They did not declare the conservatorship illegal. Too many people would be subject to lawsuits, etc. SCOTUS protected Legislative and Executive Branch powers to act in emergency situations. This part of the decision was pretty obvious

2) They did say the plaintiffs have every right to file suit for damages due to the third amendment. The big win. If the reason GSEs are still in conservatorship at this point is a lack of capital requirements then the recovered damages can be applied to the capital buffer. This is a very obvious path going forward.

3) The president has the power to remove to the conservator in certain situations. Not really a win or loss in my opinion.

In my opinion, the Treasury is already on the path to release the GSEs. They telegraphed it when they set up the capital requirements. It is an easy win for the administration if they can get the GSEs released from conservatorship and declare "Victory". There will be pressure to negotiate a settlement to give the GSEs some damages which will dig them out of the creative accounting hole they have been put in.