Replies to post #793146 on Fannie Mae-No Politics (FNMA)

[skeptic7]

they upheld the validity of the NWS and said it was not illegal and could be enacted at the discretion of the conservator. You are correct, they did not say that the NWS or the c-ship was here in perpetuity, and my meaning was that by upholding the validity of the NWS, it will be used in a manner to reduce capital retention as needed, so they've simply assured that c-ship isn't going away.

My opinion, so you can talk about all of the acronyms and nuances you like, but easier to just look at the blue print they've laid out and realize the possibility. You know a lot of companies with trillions on the books, most profitable earnings per employee, billions every quarter in profits, that trade on the OTC and whose PPS goes down after better than expected earnings...every time? Me neither.

[Guido2]

Just wish to add to your excellent post. Mnuchin sent SCOTUS a letter stating that he and Calabria had ended the NWS. One of the justices even referenced that letter.

[clarencebeaks21]

The assertion that the NWS was not validated as legal or illegal is false or misleading or both.

If by “illegal” you mean ultra vires or arbitrary or capricious, you are incorrect. In Collins, SCOTUS quite plainly reviewed the plaintiffs’ APA 702 claims and held —unanimously —that the Agency acted within its powers and functions.

If by “illegal” you mean something else, you are guilty of the fallacy of non-sequitur because SCOTUS cannot fail to decide on something it is not considering.

Skeptic, to me, is suggesting that Collins stands for a proposition: if FHFA survived one challenge under the APA, then it could use the same legal standard to survive another similar challenge. And that is correct.

To understand why, reread pages 14-15 of Collins. To survive an APA 706(2)(A) challenge, the standard is that an agency only needs to provide a reasonable basis in the record for their decision. In Collins, Alito failed to expressly list this standard, but he did explain its application to the facts and how FHFA *met the standard*:

“Whether or not this new arrangement was in the best interests of the companies or their shareholders, the FHFA could have ***reasonably concluded*** that it was in the best interests of …the public…” (emphasis added)

So altogether, in Collins, SCOTUS *does* decide the legality under the APA of FHFA’s decision, and Collins stands for the proposition that Conservator decisions that elevate the interest of the public over that of the companies or shareholders, only need a reasonable basis for doing so. A reasonable basis may arguably be a low bar, but it is not no bar at all.