Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

Meanwhile, over at TH's blog, ROLG suggests why not take a shot at the ERCF problem:

"I always thought that a lawsuit against FHFA claiming that the ERCF is an invalid administrative rule implementing the statutory requirement of a risk-based capital standard had some merit. There has been substantial success lately challenging administrative agency rule making that goes beyond statutory authority. I wonder if one can convincingly argue, based upon the F/F stress test results that best indicate risk levels, that the capital rule bears no rational relationship to the risk to be insulated against. The stress test results indicate that a much lesser capital standard would suffice…leading to the statutory requirement being imposed of 2.5%

now the most logical plaintiffs with standing would be F/F themselves, but they are not going to bring this suit. but there should be sufficient injury on the part of homeowners with mortgages guaranteed by F/F arising from this administrative rule that would support their standing to bring suit. A class action suit for damages might even be worth examining."

Fisherman's reply: "I had the same thought. In my world (Environmental Consulting), Sierra Club and River Keepers entities are always filing lawsuits against EPA, Fish and Wildlife Service, Army Corps of Engineers and other agencies claiming their rules are arbitrary and capricious. Many go to SCOTUS and seem to get shot down at that point, but some do prevail. I had to find a new job when the EPA rule covering 316b of the Clean Water Act was struck down by the 2nd circuit in NY, resulting in suspension of my projects at the time. That playbook seems relevant in this scenario as well."