Replies to post #671665 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Barring a banana republic style ruling from SCOTUS (which is highly likely) then any ruling that addresses the for cause in a way that leaves the agency under the direct control of the executive necessarily renders the PSPA as a self dealing arrangement.

The Collins plaintiffs aren't asking for the entire SPSPA to be overturned. They wouldn't mind it, but aren't asking for it. Lucia set the precedent that plaintiffs can get what they ask for as a remedy in fixing a constitutional defect.

I dont know who signed the original PSPA but if it was an acting director at the time then it will need to all be unscrambled to use the SCOTUS language.

It was James Lockhart. He was the OHFEO director when HERA was signed, and became FHFA director when HERA replaced the OHFEO with FHFA. He was neither appointed to the role by the President nor confirmed by the Senate, except perhaps to the extent that President Bush left him in place (I am not aware of an attempt by Bush to appoint his own FHFA director).

That put him in the strange position of being neither appointed by the President nor an acting director. The Collins plaintiffs' Supreme Court brief only mentions Lockhart twice on page 72, and not in conjunction with any attempt to have the original SPSPAs overturned.

Furthermore the capital rule and any plans to re-ipo will be subject to APA claims moving foreword unless re-issued after the status of the FHFA director is settled

Please elaborate here. How are either of these things subject to the APA?

Any re-IPO done as a regulatory action will be challenged as a regulatory takings by existing shareholders if done at the behest of Gov and not following a shareholder vote.

This is just plain wrong.

1) The capital raise will happen just before conservatorship ends, meaning that FHFA would still hold all the rights of shareholders. Their approval won't be needed.
2) A re-IPO cannot be a taking because the newly-issued shares are not for public use.
3) A taking lawsuit (ostensibly due to the warrants or senior-to-common conversion) would only award money damages anyway; it would not and could not undo the dilutive effects. And those damages would be limited to what the shareholders lost (drop in share price), not what the government gained by repeated Supreme Court precedent.

[Louie_Louie]

Nice posting, especially that last sentence.

[stockprofitter]

... as a regulatory takings by existing shareholders if done at the behest of Gov and not following a common shareholder vote.

Fixed it. :-D