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Re: FOFreddie post# 772760

Tuesday, 10/31/2023 11:45:59 AM

Tuesday, October 31, 2023 11:45:59 AM

Post# of 796496
Hi FOFreddie
Thanks for your thoughts. I am going to answer the 3 questions in 3 separate posts as best as I can get to them.

“1. Can common shareholders bring a Constitutional takings suit against the FHFA if the cramdown is implemented since it would be arguably outside the Conservator's power to "preserve and conserve"?”

I think you’ve proposed not a takings claim but rather an illegal exaction claim, but let me take them both separately and in that order.

(1) All takings claims current and future are presently neutered by the holding 2/22/22 in Fairholme Funds v US. So let’s say cramdown is announced today 10/31/23: if you file a Takings claim in the Court of Federal Claims tomorrow it will eventually be dismissed for failure to state a claim under rule 12(b)6, just as the Takings claim was in Fairholme Funds.

One caveat: Fisher/Shipmon/Reid are appealing to the CAFC to overrule Fairholme Funds based on SCOTUS’ 2023 decision in Tyler v Hennepin County. So Fisher’s is the one to watch for any remaining life in takings. But IMO it’s on life support and looking like it will take a Hail Mary to survive.

(2) If you style your claim not as a Takings but instead as an illegal exaction (as Barrett did in Fairholme Funds), I think there are two linked, pivotal questions: whether “preserve and conserve” is in fact a statutory duty, but, even if so, whether Collins has carved out an exception.

I recall courts have opined differently on the duty aspect. So let’s just assume that it IS a duty. Even so, doesn’t Collins allow the Incidental Powers of the Agency “and by extension the public it serves” to act as an exception to that duty? One might read the outcome of Barrett’s shareholder NWS illegal exaction that exact way: on pages 46-48 of Fairholme, the CAFC cites to Collins to defeat the exaction because of the public interest. Ostensibly, the USA will predetermine some rational public interest in which to clothe a cram down, thus shielding it by Collins. GLTA.