Fannie Mae (FNMA) and Freddie Mac (FMCC) Court Cases: Perry Capital v. Lew
Updated with tweet at bottom with Filing Issued Today, 6/21/2016, after publishing
There are plenty of cases which are ongoing with regard to Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC). In the coming days, we’ll take a brief look at some of the important ones and where they are at. This will provide some information into the ongoing battles.
Perry v Jacob J. Lew, et al.,
Hedge Fund Perry Capital LLC initially filed the case in the United States District Court in the District of Columbia challenging the decision of the U.S Treasury Department and Federal Housing Finance Agency (FHFA) with regard to the profit sweep. The lawsuit states that the government violated terms of the 2008 bailout agreement.
According to the lawsuit, the Treasury department did not have the authority with respect to dividend sweep for purchase of new securities at the beginning of 2010 as per HERA. The FHFA also failed to conserve assets of Fannie Mae (FNMA) and Freddie Mac (FMCC) as a conservator.
Initial Case with Judge Lamberth in US District Court for the District of Columbia
The case was initially heard by Judge Lamberth. Judge Lamberth granted the governments motion to dismiss dealing the plantiffs a large blow and sending shares plummeting on September 30, 2014. While the decision was negative for shareholders, Judge Lamberth provided some opening for the plaintiffs stating that he believed that takings were not ripe. He also questioned the Housing and Economic Recovery Act of 2008 (“HERA”) and asked whether it was unconstitutional, despite ruling for the government.
Lamberth motion to dismiss: http://gselinks.com/Court_Filings/Perry/13-cv-01025-0051.pdf
Appeal in United States Court of Appeals for District of Columbia Circuit
Perry Capital chose to appeal. The appeal case was assigned to Judges Brown, Ginsburg, and Millet in the United States Court of Appeals for the District of Columbia Circuit.
Judges Brown and Ginsburg have a reputation for disliking delegation of Congressional powers to administrative agencies. The appeal underwent oral arguments on April 15th, 2016. There was initial optimism from oral arguments based on the Judge’s questioning. However, initial optimism based on assessment of Judge’s questioning can be deceiving as they often can play devils advocate, and motives of questioning can be misunderstood.
The case has had oral arguments and is currently awaiting a decision from the three Judge Panel on the United States Court of Appeals for the District of Columbia Circuit. There are many possible ways this could shake out including the Judges deciding to reverse, vacate, remand for trail, or uphold. Much has happened since Judge Lamberth dismissed without even an administrative record. The Judges could easily remand the case back to Lamberth for more fact finding.
A decision in this case could come at any time.
Update After Publish:
— Ron Begala Swanson (@ckc12_rb) June 21, 2016
This clearly indicates the Judges are looking for more information which will push back the timeline and means a decision is no longer eminent, but additional filings will be considered. The Judges are being very thorough here and considering as many angles as possible.
Additional catch up:
- More on Perry Capital Oral Arguments from Fiderer on GSEs: Oral Arguments in Perry Capital v Lew Devolved into Nonsense
- Summary of Filings For Case Available via GSELinks and TimHoward717.
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