Fannie Mae-No Politics (FNMA)

[Rodney5]

This is a failure of the legal strategies. Not a failure of the Judges. If we go back to the Statutes we find that the controlling Statute is the Charter Act. FHFA is a child of this law not the other way around. If there is no GSEs created there is no safety and Soundness. If we look at the SPSPA it is stated that only the Charter Act enables Treasury to enter into the agreement. Not the actions of a Conservator. Further Congress enumerated as Judge Lamberth has said “Clear as Day” that a capital distribution that lowers FNMAs capital below the limits established in the Safety and Soundness Act is prohibited unless prior written approval of the director of FHFA is obtained. This is a direct responsibility of the director enumerated by Congress and predates HERA. If Congress didnt want this in the statute, they could have eliminated it when amending the Charter Act. Instead they changed the the name of the agency to FHFA. This is the proper law to challenge the NWS under.

Code of Federal Regulation

1237.12 Capital distributions while in conservatorship.

(a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship.

(b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution:

No 1: Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity;

No 2: Will contribute to the long-term financial safety and soundness of the regulated entity;

No 3: Is otherwise in the interest of the regulated entity; or

No 4: Is otherwise in the public interest.

Section c, this section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation.


DID THE NET WORTH SWEEP

Enchance the ability to meet risk-based capital level? NO

Contribute to the long-term financial safety and soundness of the regulated entity? NO

In the interest of the regulated entity? NO

Is otherwise in the public interest? NO
(The taxpayers are responsible of the liabilities of the enterprises).

The Net Worth Sweep could not possibly have any rehabilitative effect and that one of the principal duties of the FHFA Director is to preserve and conserve assets.

Fannie is allowed to retain its earnings until it fully meets its applicable risk-based capital requirement (it’s currently short by $247.8 billion), but those increased retained earnings are matched by a dollar-for-dollar increase in Treasury’s liquidation preference.

https://gov.ecfr.gov/current/title-12/chapter-XII/subchapter-B/part-1237/subpart-D/section-1237.12