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Replies to post #660293 on Fannie Mae-No Politics (FNMA)
01/14/21 10:11 AM
02/01/21 9:58 AM
JUSTICE THOMAS: But how would we unscramble the egg here? How do we put the parties back into the position they were in prior to Amendment III?
MR. THOMPSON: Thank you, Your Honor. Our preferred remedy that we articulated to the Fifth Circuit Court of Appeals en banc is that the overpayments measured against the 18.9 billion dollars of dividends that were being paid, that anything above that be treated as a paydown of principal on the government's liquidation preference. And if you do the math, the government's been paid back in toto plus 10 percent interest and there's 29.5 billion dollars left over.
The Fifth Circuit Court of Appeals asked the parties to address three questions. They gave the government 100 pages between FHFA and Treasury to address it, as it said, "in practical terms, what would setting aside the Net Worth Sweep entail and how would it affect other functions of the FHFA."
And in response to our preferred remedy, the government and FHFA said precisely nothing. They did not object. They had no practical concerns that they gave voice to.
JUSTICE THOMAS: Thank you.
MR. THOMPSON: And it's an accounting adjustment.
JUSTICE BARRETT: And -- and let me just -- I just want to be certain I understand what you're asking for. Are you asking us to say if we agreed with you on the whole thing you want an injunction ordering Treasury to pay back the billions of dollars?
MR. THOMPSON: No -- no -- no, Your Honor. So this is very important. We're seeking two things. Numbering 1, we're seeking prospective relief so that in your hypothetical the Senate confirmed director would be enjoined from making any future sweep dividend, approving any future sweep dividend payment; and, number 2, we're asking to go back and have the overpayments, over and above the $18.9 billion, to be treated as a pay down of principal. And that would essentially deem the government paid back.
