In the excerpts, simply put, the court argues that the shareholders cannot challenge the FHFA's actions in this case. The law (Recovery Act: §4617(f) and §4617(b)(2)(J)(ii)) and the reasons given for the FHFA's decisions support its authority to do what it did. The FHFA is legally protected and is "right" and the shareholders are misunderstanding what occurred and do not have the facts to support their argument.
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"Held:
1. The shareholders’ statutory claim must be dismissed. The “anti-
injunction clause” of the Recovery Act provides that unless review is
specifically authorized by one of its provisions or is requested by the
Director, “no court may take any action to restrain or affect the exer-
cise of powers or functions of the Agency as a conservator or a re-
ceiver.” §4617(f). Where, as here, the FHFA’s challenged actions did
not exceed its “powers or functions” “as a conservator,” relief is prohib-
ited. Pp. 12–17.
(a) The Recovery Act grants the FHFA expansive authority in its
role as a conservator and permits the Agency to act in what it deter-
mines is “in the best interests of the regulated entity or the Agency.”
§4617(b)(2)(J)(ii) (emphasis added). So when the FHFA acts as a con-
servator, it may aim to rehabilitate the regulated entity in a way that,
while not in the best interests of the regulated entity, is beneficial to
the Agency and, by extension, the public it serves. This feature of an
FHFA conservatorship is fatal to the shareholders’ statutory claim.
The third amendment was adopted at a time when the companies had
repeatedly been unable to make their fixed quarterly dividend pay-
ments without drawing on Treasury’s capital commitment. If things
had proceeded as they had in the past, there was a possibility that the
companies would have consumed some or all of the remaining capital
commitment in order to pay their dividend obligations. The third
amendment’s variable dividend formula eliminated that risk, and in
turn ensured that all of Treasury’s capital was available to backstop
the companies’ operations during difficult quarters. Although the
third amendment required the companies to relinquish nearly all of
their net worth, the FHFA could have reasonably concluded that this
course of action was in the best interests of members of the public who
rely on a stable secondary mortgage market. Pp. 13–15.
(b) The shareholders argue that the third amendment did not ac-
tually serve the best interests of the FHFA or the public because
it did not further the asserted objective of protecting Treasury’s capital com-
mitment. First, they claim that the FHFA agreed to the amendment
at a time when the companies were on the precipice of a financial up-
tick which would have allowed them to pay their cash dividends and
build up capital buffers to absorb future losses. Thus, the shareholders
assert, sweeping all the companies’ earnings to Treasury increased ra-
ther than decreased the risk that the companies would make further
draws and eventually deplete Treasury’s commitment. But the suc-
cess of the strategy that the shareholders tout was dependent on spec-
ulative projections about future earnings, and recent experience had
given the FHFA reasons for caution. The nature of the conserva-
torship authorized by the Recovery Act permitted the Agency to reject
the shareholders’ suggested strategy in favor of one that the Agency
reasonably viewed as more certain to ensure market stability. Second,
the shareholders claim that the FHFA could have protected Treasury’s
capital commitment by ordering the companies to pay the dividends in
kind rather than in cash. This argument rests on a misunderstanding
of the agreement between the companies and Treasury. Paying Treas-
ury in kind would not have satisfied the cash dividend obligation; it
would only have delayed that obligation, as well as the risk that the
companies’ cash dividend obligations would consume Treasury’s capi-
tal commitment. Choosing to forgo this option in favor of one that
eliminated the risk entirely was not in excess of the FHFA’s authority
as a conservator. Finally, the shareholders argue that because the
third amendment left the companies unable to build capital reserves
and exit conservatorship, it is best viewed as a step toward liquidation,
which the FHFA lacked the authority to take without first placing the
companies in receivership. This characterization is inaccurate. Noth-
ing about the third amendment precluded the companies from operat-
ing at full steam in the marketplace, and all available evidence sug-
gests that they did. The companies were not in the process of winding
down their affairs. Pp. 15–17."
