Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

"II. Review Of The Federal Circuit’s Decision Is
Important, For Its Own Sake (Particularly
In Light Of Collins) And Because Of Its Im-
plications, And This Case Is An Ideal Vehicle.
These cases are exceptionally important for three
reasons.
First, these cases are important in themselves.
They involve enormous sums of money and ask
whether private investors in two critical, congression-
ally chartered corporations are entitled to some rem-
edy for the taking of their property for the public ben-
efit. It is thus unsurprising that the government’s ac-
tion in this case has already received this Court’s at-
tention.
The Fifth Amendment’s Takings Clause “was de-
signed to bar Government from forcing some people
alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole.”
Armstrong v. United States, 364 U.S. 40, 49 (1960).
The combination of this Court’s decision in Collins
(holding the Net Worth Sweep authorized) and the
Federal Circuit’s decision here (holding that the gov-
ernment may make just “some people alone,” Petition-
ers, bear the cost of that arguably public good) is a
paradigmatic instance of that principle.
The government lawfully imposed the Net Worth
Sweep on the Companies for the benefit of taxpayers
and received a windfall of over $120 billion while evis-
cerating the shares of Petitioners. See Collins, 141 S.
Ct. at 1774, 1777; see id. at 1776 (“The facts alleged in
the complaint demonstrate that the FHFA chose a
path of rehabilitation that was designed to serve pub-
lic interests.”). Because it was within the govern-
ment’s power to impose the Net Worth Sweep taking
shareholders’ rights, private shareholders cannot
maintain an APA claim. Id. at 1778. But shareholders
pursued takings claims asserting that if the govern-
ment is entitled to take their property, they must at
least be paid just compensation. However, the lower
courts rejected these claims finding that shareholders
lack standing. Without this Court’s intervention,
these cases establish a pernicious precedent that the
government may take private property for the public
benefit, and the owners of the property lack any rem-
edy for the taking. Accordingly, this case is a perfect
vehicle for the Court to address the question pre-
sented, which is dispositive, and involves likely the
most extreme nationalization of private companies in
our nation’s history."

I added the Bold myself !

Second, the case has significant broader implica-
tions, because what the government did here provides
a simple map for corporate takeovers and shareholder
wipeouts by the government. All Congress needs to do
is pass a statute similar to the Recovery Act that
makes it easy for the government to put a company
into “conservatorship” or receivership. Then, the gov-
ernment can with impunity do what it wants with the
company for the benefit of the public: Shareholders
will be unable to assert APA claims to challenge the
government’s authority to act (because there is a stat-
ute authorizing the action under the reasoning of Col-
lins); shareholders will have no direct claims to be
compensated for that authorized action (under the
Federal Circuit’s reasoning here); the companies un-
der government control will of course bring no claims
against the government; and the shareholders will
(assuming Congress drafts its statute with minimal
care to avoid the rule of First Hartford, supra Bkgd.
B.1) have no ability to bring a derivative claim on the
companies’ behalf.

And the government has used that control to its
benefit, without the need to impose regulations
through the ordinary course.

Unlike private shareholders,
the government is entitled to sovereign immunity lim-
iting instances in which it can be sued, and it is not
subject to the same securities laws as a private share-
holder. Whereas a private controlling shareholder
owes fiduciary duties to minority shareholders and
cannot engage in insider trading, the government as
a controlling shareholder has not been subject to those
same rules.

the government has the power to take
control of a private company and force it to take ac-
tions that injure private shareholders but are benefi-
cial for the government, and it gets to do that without
having to comply with the same general corporate
laws that govern private controlling shareholders. Al-
lowing the decisions of the lower courts to stand per-
mits the government to do this without even the rem-
edy (and counter-incentive) of having to pay for the
private harm from what it does in the public interest.
In other words, without this Court’s intervention, the
Takings Clause will be meaningless to shareholders
because the lower courts have removed the mandate
that the government pay “just compensation” for tak-
ing private property in the public interest.

CONCLUSION

The Court should grant the petition.