Freddie Mac-No Politics (FMCC)

[FOFreddie]

Appropriations Clause Queries Continued.

Admin Action should raise Appropriation Clause issues because it will be directly spending UST monies without Congressional Oversight. The actual normal operation of the FHFA is also an issue based on the CFPB v All American Check Cashing decision in the 5th Circuit. I have noted before that the very next day after the DC Circuit Decision was released Collins was Remanded to the District Ct by the 5th and in May the 5th Circuit issued the All American Opinion.

After the All American decision was rendered, the Collins Plaintiffs cited All American in an amended complaint before Judge Ellison who is hearing the Collins suit on Remand as an additional basis to invalidate the 3rd Amendment.

What will be most interesting to me is how the separation of powers claims are handled in the DC Circuit Cert Petition by the Shareholders because it seems clear that the 5th Circuit has not rendered judgement yet on whether the 3rd Amendment should be overturned due to the Appropriations Clause or if the SPSA should be canceled as a retroactive remedy allowed by the SCOTUS Collins Opinion.

The DC Circuit questionable reliance on the 5th Circuit to dismiss the separation of powers claims:

https://cafc.uscourts.gov/opinions-orders/20-1912.OPINION.2-22-2022_1911455.pdf

Here is the last paragraph from the Opinion cited above

Given all these realities, especially the Supreme Court’s description of the extreme limits on the possible relief available to similarly situated shareholders, we agree with the Fifth Circuit that the shareholders have already been afforded the only possible remedy available for Bar-rett’s alleged separation-of-powers violation. We thus conclude that Barrett no longer can assert such a claim on which relief can be granted and that his separation-of-pow-ers claim must also be dismissed under Rule 12(b)(6)

The 5th Circuit has not yet decided what the appropriate remedy is in Collins for the separation of powers claims.




Here is the cite for the most recent Complaint filed by the Collins shareholder plaintiffs at the Remand before Judge Ellison in the Southern District of Texas

https://www.glenbradford.com/2022/06/fnma-fanniegate-1144/

Here is the Appropriations Clause Claim:

Violation of Congress’s Constitutional Power of the Purse Against All Defendants
103. Plaintiffs incorporate by reference the allegations of the preceding paragraphs. Case 4:16-cv-03113 Document 80 Filed on 06/03/22 in TXSD Page 37 of 48 38 104. The Supreme Court has recognized a cause of action for equitable relief to redress constitutional violations by federal officials. See Free Enter. Fund v. PCAOB, 561 U.S. 477, 491 n.2 (2010). 105. Article I of the United States Constitution grants Congress the “power over the purse,” FED. NO. 58;see also FED. NO. 78, including control over the funding of Executive Branch operations via periodic, temporally bound appropriations. 106. The American Colonies inherited, as part of fundamental constitutional tradition, the core axiom that the Executive Branch regularly depends on the Legislative Branch for funding. CFPB v. All Am. Check Cashing, Inc., 33 F.4th 218, 225–32 (5th Cir. 2022) (en banc) (Jones, J., concurring). 107. The Founders codified this principle in the Constitution, particularly in Article I, Section 9, Clause 7: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” 108. An executive agency that lacks constitutionally authorized funding to operate lacks the authority necessary “to carry out the functions of the office,” Collins, 141 S. Ct. at 1788; see also All Am. Check Cashing, 33 F.4th at 242. 109. Under Collins, FHFA is an executive agency with a single person who heads the agency. 141 S. Ct. at 1786, 1787. 110. “FHFA actions with respect to [Fannie and Freddie] could have an immediate impact on millions of private individuals and the economy at large.” Id. at 1785. 111. FHFA possesses the power to self-fund by drawing assessments from Fannie, Freddie, and the other entities FHFA regulates. 12 U.S.C. § 4516(a); id. § 4502(20). Case 4:16-cv-03113 Document 80 Filed on 06/03/22 in TXSD Page 38 of 48 39 112. Indeed, FHFA’s assessments are within the Director’s discretion, limited only by the Director’s determination of the “reasonable costs . . . and expenses of the Agency” and the funds necessary for “a working capital fund.” 12 U.S.C. § 4516(a). 113. FHFA’s funding structure is not temporally bound. The agency’s power to self[1]fund is a permanent power. See 12 U.S.C. § 4516. 114. While Fannie and Freddie have been in conservatorship since 2008, the FHFA has had control over these central sources of its own funding, including, for example, their ability to petition Congress. See 12 U.S.C. § 4617(b). 115. The FHFA adopted the Third Amendment at a time when it lacked constitutionally authorized funding to operate. 116. Accordingly, the Third Amendment must be vacated and set aside