Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), Federal Home Loan Mortgage Corp (OTCMKTS:FMCC): Epstein Thoroughly Tackles Questions in Perry Capital Case

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Much has been made about the questions brought forth by the three Judges in the Perry Capital v Lew case regarding Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC).  The first substantive pro government argument came from a likely source, John Carney of the WSJ, when he wrote, A Surprise Twist in Fannie and Freddie Appeal. It was no surprise to see Carney put a pro-government twist on the questions but even he doubled back and noted that “one possibility is that the court is more open to the idea that the government could be liable for monetary damages while enjoying immunity to injunctive relief.”

Questions from Judges Brown, Millett, and Ginsburg

Questions by Three Judges in Perry Appeal

Questions by Three Judges in Perry Appeal

Epstein Responds

Richard A. Epstein a professor of Law at NYU, and senior lecturer at the University of Chicago Law School has written a number of pro-plaintiff pieces and he tackles the questions in his latest, “The Novel Procedural Complexities in Perry Capital v Lew.” An interesting three page read that goes in depth with legalese, can be summarized for the less legally inclined through two paragraphs.

 

Before turning to these specific queries, we should ask, why this order at this time? Clearly, Judges Millett and Brown and Senior Judge Ginsburg had ample time to moot the underlying substantive questions. If they thought that Judge Lamberth was correct, they could have issued an opinion that tracked his reasoning without further briefing. The surprise request from the panel suggests, at the very least, that the judges do not think that the substantive issues are cut and dry in favor of the government.

..

In conclusion, none of the three issues raised by the D.C. Circuit prevents this case from being decided on its merits. There is full subject-matter jurisdiction over both parties. The doctrine of sovereign immunity has been effectively waived, and the rule of administrative deference does not apply to contract disputes to which the government is a party.

–Professor Richard A. Epstein, The Novel Procedural Complexities in Perry Capital v Lew

What’s Next

Briefs for the class plaintiffs to respond to the questions from the Judge are due next week July 6th, with the Treasury and FHFA responding by July 13th. Soon we will get to see how the class plaintiffs and Treasury and FHFA handle these questions as well.

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