12 U.S. Code § 4617(a)(3)(A)-(L) as it Relates to the Regulated Entities.

12 U.S. Code § 4617(a)(3)(A)-(L) as it Relates to the Regulated Entities.


On September 7, 2008, did the Regulated Entities meet the grounds for discretionary appointment of conservator or receiver? 

BlackRock August 25, 2008 Feddie Mac Confidential Capital Review

October 2008 PWC Freddie Memo

October 2008 FHFA Presentation

September 2008 PWC Freddie Memo

November 2008 FHFA Presentation

October 2008 Grant Thornton Notes

August 2008 Draft Treasury Summary

A Pattern of Deception – J Timothy Howard

HERA Statute as Written:

12 U.S. Code § 4617(a)(3)(A)-(L) Grounds for discretionary appointment of conservator or receiver

The grounds for appointing conservator or receiver for any regulated entity under paragraph (2) are as follows:

(A) Assets insufficient for obligations

The assets of the regulated entity are less than the obligations of the regulated entity to its creditors and others.

(B) Substantial dissipation

Substantial dissipation of assets or earnings due to—

(i) any violation of any provision of Federal or State law; or

(ii) any unsafe or unsound practice.

(C) Unsafe or unsound condition

An unsafe or unsound condition to transact business.

(D) Cease and desist orders

Any willful violation of a cease and desist order that has become final.

(E) Concealment

Any concealment of the books, papers, records, or assets of the regulated entity, or any refusal to submit the books, papers, records, or affairs of the regulated entity, for inspection to any examiner or to any lawful agent of the Director.

(F) Inability to meet obligations

The regulated entity is likely to be unable to pay its obligations or meet the demands of its creditors in the normal course of business.

(G) Losses

The regulated entity has incurred or is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the regulated entity to become adequately capitalized (as defined in section 4614 (a)(1) of this title).

(H) Violations of law

Any violation of any law or regulation, or any unsafe or unsound practice or condition that is likely to—

(i) cause insolvency or substantial dissipation of assets or earnings; or

(ii) weaken the condition of the regulated entity.

(I) Consent

The regulated entity, by resolution of its board of directors or its shareholders or members, consents to the appointment.

(J) Undercapitalization

The regulated entity is undercapitalized or significantly undercapitalized (as defined in section 4614 (a)(3) of this title), and—

(i) has no reasonable prospect of becoming adequately capitalized;

(ii) fails to become adequately capitalized, as required by—

(I) section 4615 (a)(1) of this title with respect to a regulated entity; or

(II) section 4616 (a)(1) of this title with respect to a significantly undercapitalized regulated entity;

(iii) fails to submit a capital restoration plan acceptable to the Agency within the time prescribed under section 4622 of this title; or

(iv) materially fails to implement a capital restoration plan submitted and accepted under section 4622 of this title.

(K) Critical undercapitalization

The regulated entity is critically undercapitalized, as defined in section 4614 (a)(4)of this title.

(L) Money laundering

The Attorney General notifies the Director in writing that the regulated entity has been found guilty of a criminal offense under section 1956 or 1957 of title 18 or section 5322 or 5324 of title 31.

Summarized Key Points of HERA

In total, HERA provided for 12 circumstances (summarized points) in which FHFA could place the Regulated Entities into Conservatorship or Receivership:

  1. If a Company’s assets were insufficient to meet its obligation;
  2. If a Company’s assets or earnings were substantially dissipated due to unlawful conduct or unsafe or unsound practices;
  3. If a Company was in an unsafe or unsound condition to transact business;
  4. If a Company willfully violated a cease and desist order;
  5. If a Company concealed books and records from the FHFA Director;
  6. If a Company became unlikely to be able to pay its obligations or meet the demands of its creditors in the normal course of business;
  7. If a Company incurred, or became likely to incur, losses that would deplete substantially all of its capital with no reasonable prospect of becoming adequately capitalized;
  8. If a Company violated the law;
  9. If a Company’s board of directors or shareholders passed a resolution consenting to a conservatorship or receivership;
  10. If a Company became undercapitalized or significantly undercapitalized, as defined by the governing statute, and could not or would not take corrective measures;
  11. If a Company became critically undercapitalized, as defined by the governing statue; or
  12. If a Company engaged in money laundering.

These are the arguments against the Discretionary Appointment of Conservatorship or Receivership. In my opinion, the burden of proof of placing GSEs under conservatorship should be upon the FHFA as Regulator.

(A) Assets insufficient for obligations

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. As of June 30, 2008, the date of most recently reported financial results for the last quarter immediately preceding Fannie Mae’s conservatorship, which were not filed with the SEC until August 8, 2008, Fannie Mae had assets of $885.9 billion and liabilities of $844.5. Thus, Fannie Mae assets exceeded its liabilities by more than $41 billion just shortly before the conservatorship was imposed. In fact, Fannie Mae’s assets had exceeded its liabilities by approximately $40 billion for each of the past three calendar years. Thus, no factual basis existed for asserting that the Regulated Entities’ assets were less than their obligations and; therefore, the statutory ground set forth in section 4617(a)(3)(A) was not satisfied.

(B) Substantial dissipation

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. From December 31, 2005, to June 30, 2008 Fannie Mae’s assets grew from $834.1 billion to $896.6 billion. Thus, company assets were increasing. Fannie Mae earnings had no substantial dissipation; although, Fannie Mae’s earnings decreased from 2005 to 2007, they increased in the first half of 2008 over earnings in the second half of 2007. Furthermore, Fannie Mae’s decline in earnings in 2007 was not attributable to either a violation of law or to any unsafe and unsound practice; but rather, the decline was largely attributable to the following:

>A narrowing of the interest spread earned by Fannie Mae resulting from higher borrowing costs during a period of turmoil in the financial markets;

>The need to increase reserves to offset expected future credit losses stemming from the general decline in the housing market which was negatively impacting all financial firms at the time; and

>Discrete one-time losses on derivatives contracts with corresponding offsetting gains that were not simultaneously recognized.

None of these circumstances reflected either a violation of law or an unsafe and unsound practice on the part of Fannie Mae. Furthermore, there has never been any allegation that the Companies engaged in a violation of any law resulting in the substantial dissipation of assets or earnings. On September 7, 2008, public announcement of the conservator, Director Lockhart strongly emphasized that the management and directors of the Companies had done nothing wrong, noting that any difficulties they were facing were the result of extenuating circumstances.   On the same day, Secretary Paulson emphasized that; “I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction. Fannie Mae’s and Freddie Mac’s management and their Boards are responsible for neither.”

(C) Unsafe or unsound condition

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were engaged in any unsafe or unsound practice or was in danger of incurring losses that would caused their capital to fall below regulatory capital requirements. Moreover, the GSEs had capital substantially in excess of their regulatory capital requirements. Accordingly, the GSEs were not operating in an unsafe or unsound condition. The GSEs were subject to capital requirements contained in HERA, which, by definition, were engineered to ensure that the GSEs remained in a safe and sound condition. To that end, HERA specifically provides that the risk-based capital requirement shall “ensure that the enterprises operate in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of each enterprise.” To be clear, both of the Regulated Entities substantially exceeded the applicable risk-based requirements, and this has always been the case. Thus, by definition, the Entities were in a safe and sound condition.

“Stress test”, commonly referred to as the “100-year storm” test, required that the GSEs total capital was sufficient to withstand a 1-year period of extreme economic instability and adverse market conditions.

As of June 30, 2008, Fannie Mae’s core capital exceeded both the FHFA-directed and statutory minimum capital requirement and its total capital exceeded its minimum capital requirement by $14.3 billion, or 43.9%, and its total capital exceeded its statutory risk-based capital requirement by $19.3 billion, or 53%. Regulated Entities would have passed any reasonable risk-based capital stress test that could have been applied at that time. Therefore, GSEs were not operating in an unsafe or unsound condition and, therefore, the statutory ground for appointing a conservator set forth in this subsection was not satisfied.

(D) Cease and desist orders

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were in violation of a cease and desist order. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(E) Concealment

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs at any time concealed their books, papers, records, or assets, or any refusal to submit the books, papers, or records for inspection to any examiner or to any lawful agent of the Director. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(F) Inability to meet obligations

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. The regulated entities were likely to be able to pay its obligations or meet the demands of its creditors in the normal course of business. As of June 30, 2008, Fannie Mae had $344.8 billion of short-term assets, comprised chiefly of cash, cash equivalents, and investments in publicly traded securities. This far exceeded the company’s $247 billion in short-term liabilities. Fannie Mae’s holdings of investment securities were carried on the company’s balance sheet on a fair value basis, and thus represent a market valuation for those assets. Both GSEs had sufficient assets to meet their obligations and any demands of their creditors in the normal course of business. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(G) Losses

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. During the period leading up to the imposition of the conservatorship, neither regulated entities had incurred losses that substantially depleted their capital let alone all of their capital. From December 31, 2007, to June 30, 2008 Fannie Mae’s total capital increased from $48.7 billion to $55.6 billion, and its core capital increased from $45.4 billion to $47 billion. Thus, Fannie Mae capital had not been depleted. Losses were primarily reflected the Entities’ recording of substantial reserves for potential future credit losses. These losses are not actually realized until future periods (if they are ever realized at all), and they can be offset by correlating deferred tax assets that have a reasonable expectation of being realized in the future (based partly on a lengthy history of largely positive financial performance), Thus, they are added back into the calculation of total capital and do not actually impact total capital. Moreover, Fannie Mae had access to substantial capital in the public equity markets. In December 2007, Fannie Mae raised approximately $7 billion through an issuance of Series S preferred stock; in May 2008, Fannie Mae raised almost $2.1 billion by issuing Series 2008-I preferred stock; and also raised an additional $2.25 billion by issuing Series T preferred. At around the same time, Fannie Mae also raised $2.59 billion by issuing 94.3 million shares of common stock at a price of $27.5 per share. The original 82 million shares offering was oversubscribed by 12.3 million shares. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(H) Violations of law

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither Companies violated any law or regulation, or any unsafe or unsound practice or condition that is likely to—

(i) Cause insolvency or substantial dissipation of assets or earnings; or

(ii) Weakening of their condition.

Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(I) Consent

The Regulated entities did not by resolution of its board of directors or its shareholders or members voluntarily consents to the appointment of conservator. Any consent purportedly obtained by the Companies’ board of directors was coerced and/or otherwise improperly obtained, rendering any such consent invalid. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(J) Undercapitalization

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. At all relevant times prior to and including the time the FHFA was appointed as conservator, the Companies were “adequately capitalized.” To qualify as “adequately capitalized,” a company is required to have:

(a) “Total Capital” (as defined at 12 C.F.R. § 1750.11(n)) equal to or in excess of its “Risk-Based Capital” (as defined at 12 U.S.C. § 4611 (a)(1)); and

(b) “Core Capital” (as defined at 12 C.F.R. § 1750.2) equal to or in excess of its “Minimum Capital” (as defined at 12 C.F.R. § 1750.4).

At the time the conservatorships were imposed, not only were the Companies adequately capitalized with both of these requirements, and each company’s capital was substantially in excess of its capital requirements. Moreover, each company’s ability to raise capital from the public equity and private capital markets was more than sufficient to allow it to absorb any potential future losses, particularly if the Companies had been allowed to offer terms to potential investors as favorable as those demanded by the Government in exchange for the extremely costly capital it provided upon taking control of the Companies. And the Companies always had more than sufficient assets and capital to satisfy all obligations to their creditors. See 10K filing. Because both Companies were more than adequately capitalized, as defined under law, they were not undercapitalized or significantly undercapitalized. Therefore, the FHFA Director lacked any justification or legal authority to appoint a conservator for the Companies.

In addition to the statutory capitalization requirements, Fannie Mae was, during parts of 2007 and 2008, subject to a consent order from OFHEO under which it was required to keep core capital at a level 30% higher than the minimum capital requirement. This 30% requirement was lowered to 20% for the first quarter of 2008, and lowered again to 15% for the second quarter of 2008 in accordance with the provisions of the consent order. Fannie Mae had sufficient surplus capital such that it was always in compliance with this additional capitalization requirement. As a note, in the months leading up to the decision to appoint the FHFA as conservator for the GSEs, Companies’ regulators repeatedly emphasized that the Companies were adequately capitalized.

Moreover, even if one of the Companies was undercapitalized, Director Lockhart would have been required to provide the undercapitalized company an opportunity to submit and comply with a capital restoration plan, and to demonstrate that it could have raised private capital if and as needed. Specifically, under 12 U.S.C § 4615(a) (entitled “Mandatory actions”), as amended by HERA, “the Director of the FHFA shall” impose on an undercapitalized Regulated Entity a capital restoration plan. Had such a plan been required of either company, both GSEs would have been capable of meeting such a requirement and, further, would have been able to raise additional capital from the private markets if and as needed. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

(K) Critical undercapitalization

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. As alleged above, at all relevant times, both GSEs had total capital and core capital in excess of all applicable regulatory requirements.   Therefore, at all relevant times, neither GSEs were critically undercapitalized. As such, the ground for appointing a conservator set forth in this subsection was not satisfied.

(L) Money laundering

Neither of the Companies fell within the purview of this subsection at the time they were placed in Conservatorship. Neither GSEs were ever been found guilty of a criminal offense under section 1956 or 1957 of title 18 or section 5322 or 5324 of title 31. Therefore, the ground for appointing a conservator set forth in this subsection was not satisfied.

Michael Kimelman: How Obama committed “biggest theft in history”


Calling for a Correction to the False GSE Bailout Narrative

There is great urgency to get the truth out!  News agencies such as Washington Post, Wall Street Journal, Bloomberg and many more have published false narrative about the GSEs Bailout. Now after 8 years, this false narrative continued even in the Appeals Court.

It is time to gather the truth from the 11,000 pieces of evidence and share it!  We the People should demand for a correction to the false GSE bailout narrative. Judge Brown’s clearly knows and have stated in her opinion the true motive behind the Net Worth Sweep and FHFA ultra vires conduct.  In fact, Ginsberg and Millett know as well but sadly they returned with a difference opinion.

D.C. Circuit Refuses To See Limits To Government Power And Inexcusably Upholds The Net Worth Sweep

Quote from Richard A. Epstein 

“In closing, there is a simple test by which to measure the probity of the combined actions of FHFA and Treasury. If FHFA were replaced by a private trustee, and Treasury were replaced by a private supplier of fresh debt or equity capital, both parties would end up in jail if they concocted a scheme that resembled the NWS. Everyone would cut through the various smokescreens to see that the excess dividends were a naked raid on the interests of the other shareholders as happened here. The great tragedy of the majority opinion is it follows the all-too-common practice of giving the government a free pass when its own motives are as corrupt, or more so, than comparable private parties in similar roles and with similar legal duties. From the time that I started to work on this issue, I always said that litigating against the government is like playing craps with loaded dice. So far the sorry performance in Perry Capital has validated that gloomy prediction. The time is running short, but there needs to be some serious judicial action either in the Circuit Court or Supreme Court to correct against the egregious statutory contortions and manifest injustice of sustaining the Net Worth Sweep.”

The Trump Administration should release the rest of the 11,000 pieces of evidence to be transparent.  It’s time to tell the real story of how Obama stole from GSEs shareholders to fund his bankrupted Obamacare. It’s time to make GSEs shareholders whole after 8 years.

Watch the Alex Jones Radio ShowAlex Jones talks with Jerome Corsi about the ongoing debacle that is Obamacare and how the taxpayer is still paying for it. (Share this link)

WATCH: Dave Stevens gives MBA’s top priorities to new HUD secretary

Millstein CEO Sees Path to Paying for Trump’s Promises

On July 8, 2008, Lockhart clearly stated Fannie, Freddie Adequately Capitalized!

Mortgage financiers Fannie Mae and Freddie Mac are adequately capitalized and continue to be active in the mortgage market, said James Lockhart, director of the Office of Federal Housing Enterprise, which regulates the two enterprises.

“Both of these companies are adequately capitalized, which is our highest criteria,” Lockhart said in an interview with CNBC. “They have been very active in the mortgage market, and they are continuing to be. And, in fact, Congress has put on them the requirement to do jumbo mortgages and they have been doing those as well.”

Lockhart also said OFHEO is working with the Financial Accounting Standards Board, or FASB, on the revision of rule FAS 140, an accounting rule that raised concerns about Fannie and Freddie’s capital needs and sparked a steep sell off of their shares on Monday.

Lockhart said the proposed accounting change should not dictate their capital requirements.
Lockhart’s comments soothed rattled nerves and helped Fannie Mae and Freddie Mac shares rebound early Tuesday. However, by late morning, the stock were trading mixed.

Accounting rulemakers are considering changing a rule that could force companies to account for securitized assets, such as mortgage-backed securities, on their balance sheets.

Taken literally, it could mean Fannie Mae and Freddie Mac would need a combined $75 billion in additional capital, according to a Lehman Brothers research note published Monday.

“I have to tell you, an accounting change should not drive a capital change,” Lockhart told CNBC.

Statements on the possible impact of the accounting rule by Lehman and other analysts on Monday struck a raw nerve for investors already concerned the ailing housing market would create greater-than-expected losses for the government-sponsored enterprises (GSEs).

The GSEs have raised billions of dollars in capital to run their businesses and offset more than $12 billion in combined losses since June. Both have said they do not expect improvement in housing until 2009.

Meanwhile, their equity investors have lost a collective $89 billion as their stock market values have tanked since the crisis erupted last August — $36.9 billion for Freddie and $52.1 billion for Fannie. Monday’s selloff alone pushed shares of the two stocks to their lowest levels in nearly 16 years.

Lockhart stressed Tuesday that Fannie Mae and Freddie Mac “are playing a critical role in this mortgage market” and that their support for housing must be balanced with their ability to make money for shareholders.

Analysts expect the companies will have to raise more capital with common stock, diluting the value of existing shares.

That speculation has been exacerbated by regulators and lawmakers who have pressuring the companies to raise capital for use in stabilizing the housing market that has worsened the U.S. economic slowdown.

“You have to make sure these firms have adequate returns for their shareholders so they can continue to raise capital,” Lockhart said.

The Obamacare Financing Flimflam

March 2, 2017

The fact that the Obama administration illegally used funds not appropriated by Congress to prop up Obama Care should be a big story but somehow the diligent media has somehow been able to make sure the public doesn’t see it. Essentially the Obama Administration stole money from low income housing funds at Fannie and Freddie to prop up Obama Care after a Judge told them to stop diverting funds illegally at HHS.

From the following article:

Federal court litigation provides evidence the Obama administration illegally diverted taxpayer funds that had not been appropriated by Congress in an unconstitutional scheme to keep Obamacare from imploding.

In 2016, a U.S. District judge caught the Obama administration’s Health and Human Services Department acting unconstitutionally and therefore put an end to the illegal diversion of taxpayer funds, but the Obama aadministration didn’t stop there.

The Obama administration instead turned to the nation’s two government-sponsored mortgage giants – the Federal National Mortgage Association, commonly known as “Fannie Mae,” and the Federal Home Loan Mortgage Corporation, commonly known as “Freddie Mac” – to invent a new diversion of funds in a desperate attempt to keep Obamacare from collapsing.

Now we know why the Obama Administration unilaterally changed rules on Fannie Mae funds in 2012. They basically screwed private sector bondholders and shareholders to create a slush fund for left wing groups allied with the administration. These funds do not go through Congress. They are treated as off balance sheet entities where the amount that comes to the government is treated as a net reduction in expenses instead of an increase in revenue. In other words it allows Congress and the President to pretend they are controlling spending.

Perry Capital LLC vs Mnuchin Appeals Court

In 2007–2008, the national economy went into a severe recession due in significant part to a dramatic decline in the housing market. That downturn pushed two central players in the United States’ housing mortgage market—the Federal National Mortgage Association (“Fannie Mae” or “Fannie”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “Freddie”)—to the brink of collapse (NOT TRUE). Congress concluded that resuscitating Fannie Mae and Freddie Mac was vital for the Nation’s economic health, and to that end passed the Housing and Economic Recovery Act of 2008 (“Recovery Act”). Under the Recovery Act, the Federal Housing Finance Agency (“FHFA”) became (FORCED according to Hank Paulson, then Treasury Secretary) the conservator of Fannie Mae and Freddie Mac.

Dissenting opinion filed by Circuit Judge BROWN

FHFA pole vaulted over those boundaries, disregarding the plain text of its authorizing statute and engaging in ultra vires conduct. Even now, FHFA continues to insist its authority is entirely without limit and argues for a complete ouster of federal courts’ power to grant injunctive relief to redress any action it takes while purporting to serve in the conservator role.

While I agree with much of the Court’s reasoning, I cannot conclude the anti-injunction provision protects FHFA’s actions here or, more generally, endorses FHFA’s stunningly broad view of its own power. Plaintiffs—not all innocent and ill-informed investors, to be sure—are betting the rule of law will prevail. In this country, everyone is entitled to win that bet. Therefore, I respectfully dissent from the portion of the Court’s opinion rejecting the Institutional and Class Plaintiffs’ claims as barred by the anti-injunction provision and all resulting legal conclusions.

The Housing and Economic Recovery Act of 2008 (“HERA” or the “Act”), Pub. L. No. 110-289, 122 Stat. 2654 (codified at 12 U.S.C. § 4511, et seq.), established a new financial regulator, FHFA, and endowed it with the authority to act as conservator or receiver for Fannie and Freddie. The Act also temporarily expanded the United States Treasury’s (“Treasury”) authority to extend credit to Fannie and Freddie as well as purchase stock or debt from the Companies. My disagreement with the Court turns entirely on its interpretation of HERA’s text.

Pursuant to HERA, FHFA may supervise and, if needed, operate Fannie and Freddie in a “safe and sound manner,” “consistent with the public interest,” while “foster[ing] liquid, efficient, competitive, and resilient national housing finance markets.” 12 U.S.C. § 4513(a)(1)(B). The statute further authorizes the FHFA Director to “appoint [FHFA] as conservator or receiver” for Fannie and Freddie “for the purpose of reorganizing, rehabilitating, or winding up [their] affairs.” Id. § 4617(a)(1), (2) (emphasis added). In order to ensure FHFA would be able to act quickly to prevent the effects of the subprime mortgage crisis from cascading further through the United States and global economies, HERA also provided “no court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” Id. § 4617(f) (emphasis added).

By its plain terms, HERA’s broad anti-injunction provision bars equitable relief against FHFA only when the Agency acts within its statutory authority—i.e. when it performs its “powers or functions.” See New York v. FERC, 535 U.S. 1, 18 (2002) (“[A]n agency literally has no power to act . . . unless and until Congress confers power upon it.”). Accordingly, having been appointed as “conservator” for the Companies, FHFA was obligated to behave in a manner consistent with the conservator role as it is defined in HERA or risk intervention by courts. Indeed, this conclusion is consistent with judicial interpretations of HERA’s sister statute and, more broadly, with the common law.

FHFA’s general authorization to act appears in HERA’s “[d]iscretionary appointment” provision, which states, “The Agency may, at the discretion of the Director, be appointed conservator or receiver” for Fannie and Freddie. 12 U.S.C. § 4617(a)(2) (emphasis added). The disjunctive “or” clearly indicates FHFA may choose to behave either as a conservator or as a receiver, but it may not do both simultaneously. See also id. § 4617(a)(4)(D) (“The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this chapter.”). The Agency chose the first option, publicly announcing it had placed Fannie and Freddie into conservatorship on September 6, 2008 after a series of unsuccessful efforts to capitalize the Companies. They remain in FHFA conservatorship today. Accordingly, we must determine the statutory boundaries of power, if any, placed on FHFA when it functions as a conservator and determine whether FHFA stepped out of bounds.

The Court emphasizes Subsection 4617(b)(2)(B)’s general overview of the Agency’s purview:
The Agency may, as conservator or receiver—

(i) take over the assets of and operate the regulated entity with all the powers of the shareholders, the directors, and the officers of the regulated entity and conduct all business of the regulated entity;
(ii) collect all obligations and money due the regulated entity;
(iii) perform all functions of the regulated entity in the name of the regulated entity which are consistent with the appointment as conservator or receiver;
(iv) preserve and conserve the assets and property of the regulated entity; and
(v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Agency as conservator or receiver.

Id. § 4617(b)(2)(B). From this text, the Court intuits a general statutory mission to behave as a “conservator” in virtually all corporate actions, presumably transitioning to a “receiver” only at the moment of liquidation. Op. 27 (“[HERA] openly recognizes that sometimes conservatorship will involve managing the regulated entity in the lead up to the appointment of a liquidating receiver.”); 32 (“[T]he duty that [HERA] imposes on FHFA to comply with receivership procedural protections textually turns on FHFA actually liquidating the Companies.”). In essence, the Court’s position holds that because there was a financial crisis and only Treasury offered to serve as White Knight, both FHFA and Treasury may take any action they wish, apart from formal liquidation, without judicial oversight. This analysis is dangerously far-reaching. See generally 2 James Wilson, Of the Natural Rights of Individuals, in THE WORKS OF JAMES WILSON 587 (1967) (warning it is not “part of natural liberty . . . to do mischief to anyone” and suggesting such a nonexistent right can hardly be given to the state to impose by fiat). While the line between a conservator and a receiver may not be completely impermeable, the roles’ heartlands are discrete, well-anchored, and authorize essentially distinct and specific conduct.

A mere two subsections later, HERA helpfully lists the specific “powers” that FHFA possesses once appointed conservator:

The Agency may, as conservator, take such action as may be—
(i) necessary to put the regulated entity in a sound and solvent condition; and
(ii) appropriate to carry on the business of the regulated entity and preserve and conserv

The Court makes much of the statute’s statement that a conservator “may” take action to operate the company in a sound and solvent condition and preserve and conserve its assets while a receiver “shall” liquidate the company. It concludes the statute permits, but does not compel in any judicially enforceable sense, FHFA to preserve and conserve Fannie’s and Freddie’s assets however it sees fit. See Op. 21–25. I disagree. Rather, read in the context of the larger statute—especially the specifically defined powers of a conservator and receiver set forth in Subsections 4617(b)(2)(D) and (b)(2)(E)—Congress’s decision to use permissive language with respect to a conservator’s duties is best understood as a simple concession to the practical reality that a conservator may not always succeed in rehabilitating its ward. The statute wisely acknowledges that it is “not in the power of any man to command success” and does not convert failure into a legal wrong. See Letter from George Washington to Benedict Arnold (Dec. 5, 1775), in 3 THE WRITINGS OF GEORGE WASHINGTON, 192 (Jared Sparks, ed., 1834). Of course, this does not mean the Agency may affirmatively sabotage the Companies’ recovery by confiscating their assets quarterly to ensure they cannot pay off their crippling indebtedness. There is a vast difference between recognizing that flexibility is necessary to permit a conservator to address evolving circumstances and authorizing a conservator to undermine the interests and destroy the assets of its ward without meaningful limit.

A conservator endeavors to “put the regulated entity in a sound and solvent condition” by “reorganizing [and] rehabilitating” it, and a receiver takes steps towards “liquidat[ing]” the regulated entity by “winding up [its] affairs.” 12 U.S.C. § 4617(a)(2), (b)(2)(D)–(E).2 In short, FHFA may choose whether it intends to serve as a conservator or receiver; once the choice is made, however, its “hard operational calls” consistent with its “managerial judgment” are statutorily confined to acts within its chosen role. See Op. 23. There is no such thing as a hybrid conservator-receiver capable of governing the Companies in any manner it chooses up to the very moment of liquidation. See Op. 55–56 (noting HERA “terminates [shareholders] rights and claims” in receivership and acknowledging shareholders’ direct claims against and rights in the Companies survive during conservatorship).

The Director’s discretion to appoint FHFA as “‘conservator or receiver for the purpose of reorganizing, rehabilitating, or winding up the affairs of a regulated entity’” does not suggest slippage between the roles. See FHFA Br. 41 (quoting 12 U.S.C. § 4617(a)(2)). Between the conservator and receiver roles, FHFA surely has the power to accomplish each of the enumerated functions; nonetheless, a conservator can no more “wind[] up” a company than a receiver can “rehabilitat[e]” it. See 12 U.S.C. § 4617(b)(3)(B) (using “liquidation” and “winding up” as synonyms).

Moreover, it is the proper role of courts to determine whether FHFA’s challenged actions fell within its statutorily-defined conservator role. In County of Sonoma v. FHFA, for example, when our sister circuit undertook this inquiry, it observed, “If the [relevant] directive falls within FHFA’s conservator powers, it is insulated from review and this case must be dismissed,” but “[c]onversely, the anti-judicial review provision is inapplicable when FHFA acts beyond the scope of its conservator power.” 710 F.3d 987, 992 (9th Cir. 2013); see also Leon Cty. v. FHFA, 700 F.3d 1273, 1278 (11th Cir. 2012) (“FHFA cannot evade judicial scrutiny by merely labeling its actions with a conservator stamp.”). Here, the Court abdicates this crucial responsibility, blessing FHFA with unreviewable discretion over any action—short of formal liquidation—it takes towards its wards.

In language later copied word-for-word into HERA, FIRREA lists the FDIC’s powers “as conservator or receiver,” 12 U.S.C. § 1821(d)(2)(A)–(B), and it later lists the FDIC’s “[p]owers as conservator” alone, id. § 1821(d)(2)(D). Save for references to a “regulated entity” in place of a “depository institution,” the conservator powers delineated in the two statutes are identical. In fact, FIRREA’s text demonstrates the Legislature’s clear intent to create a textual distinction between conservator and receiver powers:

The FDIC is authorized to act as conservator or receiver for insured banks and insured savings associations that are chartered under Federal or State law. The title also distinguishes between the powers of a conservator and receiver, making clear that a conservator operates or disposes of an institution as a going concern while a receiver has the power to liquidate and wind up the affairs of an institution.

FIRREA had assigned to “conservators” responsibility for taking “such action as may be . . . necessary to put the insured depository institution in a sound and solvent condition; and . . . appropriate to carry on the business of the institution and preserve and conserve [its] assets,” 12 U.S.C. § 1821(d)(2)(D), and it imposed upon them a “fiduciary duty to minimize the institution’s losses,” 12 U.S.C. § 1831f(d)(3). “Receivers,” on the other hand, “place the insured depository institution in liquidation and proceed to realize upon the assets of the institution.” Id. § 1821(d)(2)(E). The proper interpretation of the text is unmistakable: “a conservator may operate and dispose of a bank as a going concern, while a receiver has the power to liquidate and wind up the affairs of an institution.” James Madison Ltd. ex rel. Hecht v. Ludwig, 82 F.3d 1085, 1090 (D.C. Cir. 1996); see also, e.g., Del E. Webb McQueen Dev. Corp. v. RTC, 69 F.3d 355, 361 (9th Cir. 1995) (“The RTC [a government agency similar to the FDIC], as conservator, operates an institution with the hope that it might someday be rehabilitated. The RTC, as receiver, liquidates an institution and distributes its proceeds to creditors according to the priority rules set out in the regulations.”); RTC v. United Tr. Fund, Inc., 57 F.3d 1025, 1033 (11th Cir. 1995) (“The conservator’s mission is to conserve assets[,] which often involves continuing an ongoing business. The receiver’s mission is to shut a business down and sell off its assets. A receiver and conservator consider different interests when making . . . strategic decision[s].”). The two roles simply do not overlap, and any conservator who “winds up the affairs of an institution” rather than operate it “as a going concern”—within the context of a formal liquidation or not—does so outside its authority as conservator under the statute.

Of course, parameters for the “conservator” and “receiver” roles are not the only things HERA lifted directly from FIRREA. The anti-injunction clause at issue here came too. Section 1821(j) of FIRREA provided, “[N]o court may take any action, except at the request of the Board of Directors by regulation or order, to restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or a receiver.” 12 U.S.C. § 1821(j). Another near-perfect fit.

When Congress lifted HERA’s conservatorship standards verbatim from FIRREA, it also incorporated the long history of fiduciary conservatorships at common law baked into that statute. Indeed, “[i]t is a familiar maxim that a statutory term is generally presumed to have its common-law meaning.” Evans v. United States, 504 U.S. 255, 259 (1992); see Morissette v. United States, 342 U.S. 246, 263 (1952) (“[W]here Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed. In such case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them.”); see generally Roger J. Traynor, Statutes Revolving in Common-Law Orbits, 17 CATH. U. L. REV. 401 (1968) (discussing the interaction between statutes and judicial decisions across a number of fields, including commercial law). As Justice Frankfurter colorfully put it, “[I]f a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it.” Reading of Statutes, supra, at 537.

We have an obvious transplant here. At common law, “conservators” were appointed to protect the legal interests of those unable to protect themselves. In the probate context, for example, a conservator was bound to act as the fiduciary of his ward. See In re Kosmadakes, 444 F.2d 999, 1004 (D.C. Cir. 1971). This duty forbade the conservator—whether overseeing a human or corporate person—from acting for the benefit of the conservator himself or a third party. See RTC v. CedarMinn Bldg. Ltd. P’ship, 956 F.2d 1446, 1453–54 (8th Cir. 1992) (observing “[a]t least as early as the 1930s, it was recognized that the purpose of a conservator was to maintain the institution as an ongoing concern,” and holding “the distinction in duties between [RTC] conservators and receivers” is thus not “more theoretical than real”).

While the execution of multiple contracts with Treasury “bears no resemblance to the type of conservatorship measures that a private common-law conservator would be able to undertake,” Op. 34, that is a distinction in degree, not in kind.

Consequently, today’s Black’s Law Dictionary defines a “conservator” as a “guardian, protector, or preserver,” while a “receiver” is a “disinterested person appointed . . . for the protection or collection of property that is the subject of diverse claims (for example, because it belongs to a bankrupt [entity] or is otherwise being litigated).” BLACK’S LAW DICTIONARY 370, 1460 (10th ed. 2014). These “[w]ords that have acquired a specialized meaning in the legal context must be accorded their legal meaning.” Buckhannon Bd. & Care Home, Inc. v. W.V. Dep’t of Health & Human Res., 532 U.S. 598, 615 (2001) (Scalia, J., concurring). They comprise the common law vocabulary that Congress chose to employ in FIRREA and, later, in HERA to authorize the FDIC and FHFA to serve as “conservators” in order to “preserve and conserve [an institution’s] assets” and operate that institution in a “sound and solvent” manner. 12 U.S.C. § 1821(d)(2)(D).

These legal definitions are reflected in the terms’ ordinary meaning. For example, the Oxford English Dictionary defines a “conservator” as “[a]n officer appointed to conserve or manage something; a keeper, administrator, trustee of some organization, interest, right, or resource.” 3 OXFORD ENGLISH DICTIONARY 766 (2d ed. 1989). In contrast, it defines a “receiver” as “[a]n official appointed by a government . . . to receive . . . monies due; a collector.” 13 OXFORD ENGLISH DICTIONARY 317–18 (2d ed. 1989). Regardless of the terms’ audience, therefore, a “conservator” protects and preserves assets for an entity while a “receiver” operates as a collection agent for creditors.

The word “conservator,” therefore, is not an infinitely malleable term that may be stretched and contorted to encompass FHFA’s conduct here and insulate Plaintiffs’ APA claims from judicial review. Indeed, the Court implicitly acknowledges this fact in permitting the Class Plaintiffs to mount a claim for anticipatory breach of the promises in their shareholder agreements. See Op. 71–73. A proper reading of the statute prevents FHFA from exceeding the bounds of the conservator role and behaving as a de facto receiver.

The Court suggests FHFA’s incidental power to, “as conservator or receiver[,] . . . take any action authorized by [Section 4617], which the Agency determines is in the best interests of the regulated entity or the Agency” in 12 U.S.C. § 4617(b)(2)(J)(ii) erases any outer limit to FHFA’s statutory powers despite the common law definition of “conservator” and, therefore, forecloses any opportunity for meaningful judicial review of FHFA’s actions in conducting its so-called conservatorship at the time of the Third Amendment. See Op. 33–34. Of course, the Court’s reading of Subsection 4617(b)(2)(J)(ii) directly contradicts the immediately-preceding subsection’s authorization of FHFA “as conservator or receiver” to “exercise all powers and authorities specifically granted to conservators or receivers, respectively.” 12 U.S.C. § 4617(b)(2)(J)(i) (emphasis added). It also upends Subsection 4617(a)(5)’s provision of judicial review for actions FHFA may take in certain facets of its receiver role. But even if that were not the case, Supreme Court precedent requires an affirmative act by Congress—an explicit “instruct[ion]” that review should proceed in a “contrary” manner—to authorize departure from a common law definition. Morissette, 342 U.S. at 263. And given the potential for disruption in the financial markets discussed in Part III infra, one would expect Congress to express itself explicitly in this matter. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 160 (2000) (“[W]e are confident that Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.”). Congress offered no such statement here.

Rather, the more appropriate reading of the relevant text merely permits FHFA to engage in self-dealing transactions, an authorization otherwise inconsistent with the conservator role. See Gov’t of Rwanda v. Johnson, 409 F.3d 368, 373 (D.C. Cir. 2005) (discussing “the age-old principle applicable to fiduciary relationships that, unless there is a full disclosure by the agent, trustee, or attorney of his activity and interest in the transaction to the party he represents and the obtaining of the consent of the party represented, the party serving in the fiduciary capacity cannot receive any profit or emolument from the transaction”); see also 7 COLLIER ON BANKRUPTCY ¶ 1108.09 (16th ed.) (noting a trustee’s duty of loyalty in bankruptcy law requires a “single-minded devotion to the interests of those on whose behalf the trustee acts”). FHFA operating as a conservator may act in its own interests to protect both the Companies and the taxpayers from whom the Agency was ultimately forced to borrow, but FHFA is not empowered to jettison every duty a conservator owes its ward, and it is certainly not entitled to disregard the statute’s own clearly defined limits on conservator power.

In fact, FIRREA contains a nearly identical self-dealing provision, which provides, “The [FDIC] may, as conservator or receiver . . . take any action authorized by this chapter, which the [FDIC] determines is in the best interests of the depository institution, its depositors, or the [FDIC].” 12 U.S.C. § 1821(d)(2)(J)(ii). This authorization has not given courts pause in interpreting FIRREA to require the FDIC to behave within its statutory role. See Nat’l Tr. for Historic Pres., 21 F.3d at 472 (Wald, J., concurring) (“[Section] 1821(j) does indeed bar courts from restraining or affecting the exercise of powers or functions of the FDIC as a conservator or a receiver, unless it has acted or proposes to act beyond, or contrary to, its statutorily prescribed, constitutionally permitted, powers or functions.”); see also Sharpe v. FDIC, 126 F.3d 1147, 1155 (9th Cir. 1997) (holding the statutory bar on judicial review of the FDIC’s actions taken as a conservator or receiver “does not bar injunctive relief when the FDIC has acted beyond, or contrary to, its statutorily prescribed, constitutionally permitted, powers or functions”).

The Court also suggests the authority to act “‘in the best interests of the regulated entity or the Agency’” is consistent with the Director’s mandate to protect the “‘public interest.’” Op. 8 (quoting 12 U.S.C. § 4513(a)(1)(B)(v)). Of course, the FHFA Director is also bound to “carr[y] out [FHFA’s] statutory mission only through activities that are authorized under and consistent with this chapter and the authorizing statutes.” Id. § 4513(a)(1)(B)(iv). Indeed, this text only confirms what should have been evident: the availability of meaningful judicial review cannot bend to exigency, especially since Congress clearly did not believe the 2008 financial crisis required a more far-reaching statutory authorization than prior occasions of financial distress had commanded.

Having determined this Court may enjoin FHFA if it exceeded its powers as conservator of Fannie and Freddie, I now examine FHFA’s conduct. It is important to note at the outset the motives behind any actions taken by FHFA are irrelevant to this inquiry, as no portion of HERA’s text invites such an analysis. Rather, I examine whether or not FHFA acted beyond its authority, looking only to whether its actions are consistent either with (1) “put[ting] the regulated entity in a sound and solvent condition” by “reorganizing [and] rehabilitating” it as a conservator or (2) taking steps towards “liquidat[ing]” it by “winding up [its] affairs” as a receiver. 12 U.S.C. § 4617(a)(2), (b)(2)(D)–(E).

In September 2008, FHFA placed Fannie and Freddie into conservatorship; Director James Lockhart explained the conservatorship as “a statutory process designed to stabilize a troubled institution with the objective of returning the entities to normal business operations” and promised FHFA would “act as the conservator to operate [Fannie and Freddie] until they are stabilized.Press Release, Fed. Hous. Fin. Agency, Statement of FHFA Director James B. Lockhart at News Conference Announcing Conservatorship of Fannie Mae and Freddie Mac (Sept. 7, 2008), http://tinyurl.com/Lockhart-Statement. FHFA even promised it would “continue to retain all rights in the [Fannie and Freddie] stock’s financial worth; as such worth is determined by the market.” JA 2443 (FHFA Fact Sheet containing “Questions and Answers on Conservatorship”). And, for a period of time thereafter, FHFA did in fact manage the Companies within the conservator role. It even enlisted Treasury to provide cash infusions that, while costly, preserved at least a portion of the value of the market-held shares in the corporations.

But the tide turned in August 2012 with the Third Amendment and its “Net Worth Sweep,” transferring nearly all of the Companies’ profits into Treasury’s coffers. Specifically, the Third Amendment replaced Treasury’s right to a fixed-rate 10 percent dividend with the right to sweep Fannie and Freddie’s entire quarterly net worth (except for an initial capital reserve, which initially totaled $3 billion and will decline to zero by 2018). Additionally, the agreement provided that, regardless of the amount of money paid to Treasury as part of this Net Worth Sweep dividend, Fannie and Freddie would continue to owe Treasury the $187.5 billion it had originally loaned the Companies. It was, to say the least, a highly unusual transaction. Treasury was no longer another, admittedly very important, investor entitled to a preferred share of the Companies’ profits; it had received a contractual right from FHFA to loot the Companies to the guaranteed exclusion of all other investors.

In an August 2012 press release summarizing the Third Amendment’s terms, Treasury took a very different tone from Lockhart’s 2008 statement: “[W]e are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market.” Press Release, Dep’t of Treasury, Treasury Department Announces Further Steps To Expedite Wind Down of Fannie Mae and Freddie Mac (Aug. 17, 2012), http://tinyurl.com/Treasury-Press-Release (emphasis added). Treasury further noted the Third Amendment would achieve the “important objective[]” of “[a]cting upon the commitment made in the Administration’s 2011 White Paper that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market in their prior form.” Id. The Acting FHFA Director echoed Treasury’s sentiment in April 2013, explaining to Congress the following year the Net Worth Sweep would “wind down” Fannie and Freddie and “reinforce the notion that [they] will not be building capital as a potential step to regaining their former corporate status.” Statement of Edward J. DeMarco, Acting Director, FHFA, Before the S. Comm. on Banking, Hous. & Urban Affairs (Apr. 18, 2013), http://tinyurl.com/DeMarco -Statement.

The evolution of FHFA’s position from 2008 to 2013 is remarkable; it had functionally removed itself from the role of a HERA conservator. FHFA and Treasury even described their actions using HERA’s exact phrase defining a receiver’s conduct, yet FHFA still purported to exercise only its power as a conservator and operated free from HERA’s constraints on receivers. See 12 U.S.C. § 4617(a)(4)(D), (b)(2)(E), (b)(3), (c) (establishing liquidation procedures and priority requirements); id. § 4617(a)(5) (providing for judicial review).

The shift in policy was borne out in FHFA’s and Treasury’s actions. Indeed, all parties agree the Net Worth Sweep had the effect of replacing a fixed-rate dividend with a quarterly transfer of each company’s net worth above an initial (and declining) capital reserve of $3 billion. There is similarly no dispute that Treasury collected a $130 billion dividend in 2013, $40 billion in 2014, and $15.8 billion in 2015. In fact, during the period from 2008 to 2015, Fannie and Freddie together paid Treasury $241.2 billion, an amount well in excess of the $187.5 billion Treasury loaned the Companies. FHFA’s decision to strip these cash reserves from Fannie and Freddie, consistently divesting the Companies of their near-entire net worth, is plainly antithetical to a conservator’s charge to “preserve and conserve” the Companies’ assets.

Of course, and as the Court observes, Op. 29–31, Fannie and Freddie continue to operate at a profit. Indeed, as early as the second quarter of 2012, the Companies had outearned Treasury’s 10 percent cash dividend. Nonetheless, the Net Worth Sweep imposed through the Third Amendment—which was executed shortly after the second quarter 2012 earnings were released—confiscated all but a small portion of Fannie’s and Freddie’s profits. The maximum reserve of $3 billion, given the Companies’ enormous size, rendered them extremely vulnerable to market fluctuations and risked triggering a need to once again infuse Fannie and Freddie with taxpayer money. See JA 1983 (2012 SEC filing stating “there is significant uncertainty in the current market environment, and any changes in the trends in macroeconomic factors that [Fannie] currently anticipate[s], such as home prices and unemployment, may cause [its] future credit-related expenses or income and credit losses to vary significantly from [its then-]current expectations”). In fact, FHFA has since referred to the Companies, even with their several-billion-dollar cushion, as “effectively balance-sheet insolvent” and “a textbook illustration of instability.” Defs. Mot. to Dismiss at 19, Samuels v. FHFA, No. 13-cv-22399 (S.D. Fla. Dec. 6, 2013), ECF No. 38; see also generally, Statement of Melvin L. Watt, Director, FHFA, Statement Before the H. Comm. on Fin. Servs., at 3 (Jan. 27, 2015), http://tinyurl.com/Watt-Statement (“[U]nder the terms of the [contracts with Treasury], the [Companies] do not have the ability to build capital internally while they remain in conservatorship.”). As time went on, and the maximum reserve decreased, the situation only deteriorated. Given the task of replicating their successful rise each quarter amid volatile market conditions, it is surprising the Companies managed to maintain consistent profitability until 2016, when Freddie Mac posted a $200 million loss in the first quarter. See FREDDIE MAC, FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016, at 7 (May 3, 2016). Under the circumstances, it strains credulity to argue FHFA was acting as a conservator to “observe[ Fannie’s and Freddie’s] economic performance over time” and consider other regulatory options when it executed the Third Amendment. Op. 33. FHFA and Treasury are not “studying” the Companies, they are profiting off of them!

Similarly, any argument that the Third Amendment was executed to avoid a downward spiral hardly saves FHFA at this juncture. See, e.g., Op. 31–32. As an initial matter, the contention rests entirely upon an examination of motives. But see id. 32 (confirming motives are irrelevant to the legal inquiry). Second, even if one were to consider motives, the availability of an in-kind dividend and information recently obtained in this litigation creates, to put it mildly, a dispute of fact regarding the motivations behind FHFA and Treasury’s decision to execute the Third Amendment.

Nonetheless, the Court suggests the Third Amendment was simply a logical extension of the principles articulated in the prior two agreements. Op. 25–26. This is incorrect; the Net Worth Sweep fundamentally transformed the relationship between the Companies and Treasury: a 10 percent dividend became a sweep of the Companies’ near-entire net worth; an in-kind dividend option disappeared in favor of cash payments; the ability to retain capital above and beyond the required dividend payment evaporated; and, most importantly, the Companies lost any hope of repaying Treasury’s liquidation preference and freeing themselves from its debt. Indeed, the capital depletion accomplished in the Third Amendment, regardless of motive, is patently incompatible with any definition of the conservator role. Outside the litigation context, even FHFA agrees: “As one of the primary objectives of conservatorship of a regulated entity would be restoring that regulated entity to a sound and solvent condition, allowing capital distributions to deplete the entity’s conservatorship assets would be inconsistent with the agency’s statutory goals, as they would result in removing capital at a time when the Conservator is charged with rehabilitating the regulated entity.” 76 Fed. Reg. 35,724, 35,727 (June 20, 2011). But rendering Fannie and Freddie mere pass-through entities for huge amounts of money destined for Treasury does exactly that which FHFA has deemed impermissible. Even Congress, in debating the Consolidated Appropriations Act of 2016, H.R. 2029, 114th Cong. § 702 (2015), acknowledged such action would require additional congressional authorization. See 161 Cong. Rec. S8760 (daily ed. Dec. 17, 2015) (statement of Sen. Corker) (noting the Senate Banking Committee passed a bipartisan bill to “protect taxpayers from future economic down-turns by replacing Fannie and Freddie with a privately capitalized system” that ultimately did not receive a vote by the full Senate).

Here, FHFA placed the Companies in de facto liquidation—inconsistent even with “managing the regulated entit[ies] in the lead up to the appointment of a liquidating receiver,” as the Court incorrectly, and obliquely, defines the outer limits of the conservator role, Op. 27—when it entered into the Third Amendment and captured nearly all of the Companies’ profits for Treasury. To paraphrase an aphorism usually attributed to Everett Dirksen, a hundred billion here, a hundred billion there, and pretty soon you’re talking about real money. But instead of acknowledging the reality of the Companies’ situation, the Court hides behind a false formalism, establishing a dangerous precedent for future acts of FHFA, the FDIC, and even common law conservators.

Finally, the practical effect of the Court’s ruling is pernicious. By holding, contrary to the Act’s text, FHFA need not declare itself as either a conservator or receiver and then act in a manner consistent with the well-defined powers associated with its chosen role, the Court has disrupted settled expectations about financial markets in a manner likely to negatively affect the nation’s overall financial health.

Congress chose to import this effective statutory scheme into HERA in an effort to combat our most recent financial crisis, evidencing its belief that FIRREA’s terms were equal to the task confronting FHFA. But FHFA’s actions in implementing the Net Worth Sweep “bear no resemblance to actions taken in conservatorships or receiverships overseen by the FDIC.” Amicus Br. for Indep. Comm. Bankers of Am. 6 (reflecting the views of former high-ranking officials of the FDIC). Yet today the Court holds that, in the context of HERA—and FIRREA by extension—any action taken by a regulator claiming to be a conservator (short of officially liquidating the company) is immunized from meaningful judicial scrutiny. All this in the context of the Third Amendment’s Net Worth Sweep, which comes perilously close to liquidating Fannie and Freddie by ensuring they have no hope of survival past 2018. The Court’s conservator is not your grandfather’s, or even your father’s, conservator. Rather, the Court adopts a dangerous and radical new regime that introduces great uncertainty into the already-volatile market for debt and equity in distressed financial institutions.

Now investors in regulated industries must invest cognizant of the risk that some conservators may abrogate their property rights entirely in a process that circumvents the clear procedures of bankruptcy law, FIRREA, and HERA. Consequently, equity in these corporations will decrease as investors discount their expected value to account for the increased uncertainty—indeed if allegations of regulatory overreach are entirely insulated from judicial review, private capital may even become sparse. Certainly, capital will become more expensive, and potentially prohibitively expensive during times of financial distress, for all regulated financial institutions.

More ominously, the existence of a predictable rule of law has made America’s enviable economic progress possible. See, e.g., TOM BETHELL, THE NOBLEST TRIUMPH: PROPERTY AND PROSPERITY THROUGH THE AGES 3 (1998) (“When property is privatized, and the rule of law is established, in such a way that all including the rulers themselves are subject to the same law, economies will prosper and civilization will blossom.”). Private individual and institutional investors in regulated industries rightly expect the law will protect their financial rights—either through an agency interpreting statutory text or a court reviewing agency action thereafter. They are also entitled to expect a conservator will act to conserve and preserve the value of the company in which they have invested, honoring the capital and investment conventions of governing law. A rational investor contemplating the terms of HERA would not conclude Congress had changed these prevailing norms. See generally Yates v. United States, 135 S. Ct. 1074, 1096 (2015) (Kagan, J., dissenting) (noting statutory text may be drafted “to satisfy audiences other than courts”). Today, however, the Court explains this rational investor was wrong. And its bold and incorrect statutory interpretation could dramatically affect investor and public confidence in the fairness and predictability of the government’s participation in conservatorship and insolvency proceedings.

When assessing responsibility for the mortgage mess there is, as economist Tom Sowell notes, plenty of blame to be shared. Who was at fault? “The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible and many were irresponsible.” THOMAS SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that does not mean more irresponsibility is the solution. Conservation is not a synonym for nationalization. Confiscation may be. But HERA did not authorize either, and FHFA may not do covertly what Congress did not authorize explicitly. What might serve in a banana republic will not do in a constitutional one.

FHFA, like the FDIC before it, was given broad powers to enable it to respond in a perilous time in U.S. financial history. But with great power comes great responsibility. Here, those responsibilities and the authority FHFA received to address them were well-defined, and yet FHFA disregarded them. In so doing, FHFA abandoned the protection of the anti-injunction provision, and it should be required to defend against the Institutional and Class Plaintiffs’ claims

Links to important white paper and articles:

The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles


Fannie-Freddie bailout looms over White House


The Stage is Set for Victory

Quote From Fairholme Funds’ 2016 Annual Report

We recall Charlie Munger’s advice:

Students learn corporate finance at business schools. They are taught that the whole secret is diversification. But the rule is exactly the opposite. The ‘know-nothing’ investor should practice diversification, but it is crazy if you are an expert. The goal of investment is to find situations where it is safe not to diversify. If you only put 20% into the opportunity of a lifetime, you are not being rational. Very seldom do we get to buy as much of any good idea as we would like to.

Fannie Mae and Freddie Mac

Odds favor Fannie Mae or Freddie Mac helped your parents and you obtain a first home, and that the same will be true for your children and grandchildren. Fannie Mae and Freddie Mac guarantee the timely payment of principal and interest demanded by lenders. Investors just like you own and fund their operations. Yet, we fight an expropriation of our principal by the government. Here’s where we stand: prosperity exists in a capitalist society only when contracts are honored. The rule of law must be respected and cannot be eliminated by fiat. If you disagree, just see the despair in Venezuela. We look forward to a decision from the United States Court of Appeals for the District of Columbia Circuit that protects and preserves our investments in Fannie Mae and Freddie Mac. Signs indicate that we are nearing the end of our “Alice in Washington” journey.

Our three appellate court judges (Janice Brown, Doug Ginsburg, and Patricia Millett) published a separate decision (Heartland Plymouth Court MI, LLC v. National Labor Relations Board) that we believe is instructive to their eventual ruling in our case. Writing for the majority, Judge Brown stated:

As this case shows, what the [National Labor Relations Board (“NLRB”)] proffers as a sophisticated tool towards national uniformity can just as easily be an instrument of oppression, allowing the government to tell its citizens: “We don’t care what the law says, if you want to beat us, you will have to fight us” … We recognize the [NLRB’s] unimpeded access to the public fisc means these modest fees can be dismissed as chump change. But money does not explain the Board’s bad faith; “the pleasure of being above the rest” does. See C.S. Lewis, MERE CHRISTIANITY 122 (Harper Collins 2001). Let the word go forth: for however much the judiciary has emboldened the administrative state, we “say what the law is.” Marbury, 5 U.S. (1 Cranch) at 177. In other words, administrative hubris does not get the last word under our Constitution. And citizens can count on it.1

In another decision (DirecTV, Inc. v. National Labor Relations Board), Judge Brown was even more direct about the perils of unchecked executive action when she noted that: “Judicial review should mean more than batting cleanup for the administrative state.”2 If applied in equal measure, these sentiments bode well for our case.

Finding no clear reason in favor of extraordinary secrecy, U.S. Court of Federal Claims Judge Margaret Sweeney Fairholme Funds v. United States, No. 1:13-cv-00465-MMS) recognized that the government’s attempt to hide thousands of documents is unjustifiable, for the work of our government must withstand public scrutiny. Judge Sweeney issued a court order directing the Obama Administration to produce scores of documents that were improperly withheld based on assertions of deliberative process privilege, bank examiner privilege, and presidential communications privilege. Her decision was largely upheld upon review by the U.S. Court of Appeals for the Federal Circuit. In due course, we expect further proof that Obama Administration officials violated laws established by our founding fathers to prevent such unfettered discretion. Alexander Hamilton said it best:

The nature of the contract in its origin is, that the public will pay the sum expected in the security, to the first holder, or his assignee. The intent, in making the security assignable, is, that the proprietor may be able to make use of his property, by selling it for as much as it may be worth in the market, and that the buyer may be safe in the purchase. Every buyer therefore stands exactly in the place of the seller, has the same right with him to the identical sum expressed in the security and having acquired the right, by fair purchase, and in conformity to the original agreement and intention of the government, his claim cannot be disputed, without manifest injustice.3

We are frequently asked (i) why we own the preferred stock of Fannie Mae and Freddie Mac instead of common shares, and (ii) how this story ends. Our answers are simple: the provisions of the preferred stock contracts that we own provide us with greater security and certainty than the common stock and, as you know, we are not speculators. In this instance, we have invested in two superb insurance companies with unparalleled brand recognition, talented human capital, proprietary information technology infrastructure, and robust industry relationships. Fannie Mae and Freddie Mac are quintessential examples of what Warren Buffett would describe as “economic castles protected by unbreachable moats.” As interest rates rise, Fannie Mae’s and Freddie Mac’s portfolios become even more valuable – and we anticipate that Q4 2016 results will reflect this positive impact. Allow me to emphasize a few points that you may have heard before:

Any intellectually honest observer would proffer that the rational steps for resolution are: (i) halt the payment of any further monies to the United States Treasury; (ii) permit the companies to retain capital in order to protect taxpayers; (iii) transform the companies into low-risk, public utilities with regulated rates of return, just like your local electric company; and (iv) eventually release them from the shackles of a perpetual conservatorship so they can help more low- and moderate-income families move up the economic ladder. Only the disingenuous would assert that recapitalization of these companies would take decades and come at taxpayers’ expense, as if retaining earnings precluded the ability of each company to raise equity from private investors. Only those beholden to special interests would ignore the substantial reforms implemented at Fannie Mae and Freddie Mac over the last eight years and pretend the companies are somehow doomed to repeat the past upon release from conservatorship. And only those who oppose the dream of homeownership for America’s middle class would attempt to dismantle two publicly traded, shareholder-owned companies that have singlehandedly provided over $7 trillion in liquidity to support our mortgage market since 2009. We are optimistic that the indispensability of Fannie Mae and Freddie Mac to affordable homeownership eventually overpowers the taboo imposed upon them by the previous Washington establishment.

Fairholme Funds Annual Report 2016

Pershings Square Holdings Annual Report 2016

Kase Capital Annual Letter – Whitney Tilson

Writ of Mandamus Ruling

Original Order from Judge Sweeney Granting Access to Privilege Evidence

Letter from Cooper to Perry Appeals Court regarding Writ of Mandamus Ruling

List of privilege documents from Writ of Mandamus

Fairholme’s big win on Discovery

Important Comments from Tim Howard @ Howard on Mortgage Finance

First Quote From Tim Howard

In September 2008, Treasury granted itself 79.9 percent of the outstanding shares of the common stock of both Fannie and Freddie as a component of its purported “rescue” of them. Treasury’s action, however, was not a rescue; it was a takeover of two companies it historically had opposed, done for ideological and policy reasons. When Treasury granted itself these warrants, it had no intention of ever exercising them; its purpose was to reduce the stock prices of both Fannie and Freddie by a factor of five (since Treasury instantly gave itself the right to four-fifths of the companies’ earnings in perpetuity), in order to contribute to the sense that they were in financial free-fall (which they were not). Treasury’s intention at the time it took the companies over was ultimately to liquidate them, and to allow the warrants to expire worthless.

But Treasury, and its allies, never could come up with an alternative to Fannie and Freddie that worked as well as they did, and that Congress was willing to take a gamble on and legislate. So here we are, nine years later: the warrants still are outstanding, and Treasury Secretary-designate Mnuchin is talking about reforming Fannie and Freddie and bringing them out of conservatorship. And the warrants have become a complication.

The term sheet for the warrants says they may be exercised “in whole or in part, at any time during the exercise period [which runs through September 7, 2028]”…and that the warrants entitle Treasury to 79.9 percent of the outstanding shares of Fannie and Freddie not as of the date the warrants were granted (September 7, 2008), but “on the date of EXERCISE,” which could be any time up to September 2028.

When Treasury granted itself the warrants back in 2008, it never contemplated that the companies might issue new shares of equity to recapitalize (because it intended to kill them). But now that they might, that 2008 warrant language definitely is a problem. Unless Treasury exercises all of its warrants immediately–which would cause massive dilution and create a nearly insurmountable hurdle to reforming them and bringing them out of conservatorship–whatever percentage of its warrants for Fannie and Freddie’s “outstanding common shares” remains unexercised when they do their equity issues to recapitalize will, by the language of the 2008 Senior Preferred Stock Agreement, have to be turned into NEW shares for Treasury, for which it will pay an exercise price of one one-thousandth of one cent (meaning Fannie and Freddie will get negligible proceeds from this equity).

THAT is what I called the “deal-killer.” As long as the 2008 language governing the exercise of the warrants remains in force, the companies will not be able to recapitalize. That language never was intended to apply to companies that were going to recapitalize and come out of conservatorship. Now that this prospect is on the table, the language relating to the warrant exercises–along with other aspects of them–clearly has to be in play for alteration, amendment or cancellation.

I hope that makes this more understandable (as I said, it IS a complicated issue).

Second Quote From Tim Howard

I’ll give you my response just with respect to Fannie (makes the numbers easier to understand).

Today you have a company with about $11 billion in annual earnings, 1.15 billion shares outstanding, and essentially no capital. Let’s say Fannie needed to raise $60 billion to meet its new capital standards (not a prediction, just an example). Let’s further say that it has three years to get fully capitalized. It can get halfway there (assuming no growth in its outstanding MBS) through retained earnings, but still will need to raise about $30 billion in new equity. Factoring in dilution, let’s now assume it’s able to issue 400 million new shares at an average price of $75 per share. So now you have a fully capitalized company with $11 billion in earnings, 1.55 billion in outstanding shares, and annual EPS of $7.10 per share. At a P/E of 10:1 that’s about a $70 stock (at a P/E of 12 it’s about an $85 stock).

If Treasury exercises all of its warrants immediately, Fannie still has no capital, still has to raise $30 billion in the equity market, but now has 5.7 billion shares outstanding. Figuring the dilution that would result from Treasury selling its shares and the market anticipating the impact of mammoth capital raises is tricky, but at an average price of $15 per share Fannie would need to sell 2 billion shares of new stock to become fully capitalized. That’s a huge amount to raise in three years, and assuming you could do it, you’d end up with a company earning $11 billion per year, 7.7 million shares outstanding, an EPS of $1.43, and a stock price of about $14 at a 10 P/E ($17 at a 12 P/e).

If I’m a plaintiff, an end state that has a $14 stock versus one with a $70 dollar stock is a huge deal. I would be inclined not to settle without significant alteration of the terms of the warrants, and if I couldn’t get the terms I wanted, I would offer to fund the Washington Federal lawsuit to its conclusion, to get the warrants eliminated entirely.

That why, for me, the unaltered warrant terms are a “deal-killer.” Since Treasury did nothing to earn those warrants–it simply gave them to itself because it could–I would not accept a deal that left them unaltered (and cost me close to $55 per share on the value of the company I want to bring out of conservatorship). But we’ll see what the real plaintiffs do.

The Executive Order

Gary Cohn: Fannie Mae, Freddie Mac reform will be high on Mnuchin’s agenda
Maybe GSE reform will happen quickly after all?

Gary Cohn, National Economic Council director and former Goldman Sachs COO, discusses the Trump administration’s views on the U.S economy, over regulation and more.

Complete Video of Steven Mnuchin confirmation hearing

Mnuchin: Get Fannie Mae, Freddie Mac out of government ownership

Sen. Warner Questions Treasury Nominee Steve Mnuchin

But asked by Warner if he does indeed support the recap and release of Fannie and Freddie, Mnuchin threw water on those who hope to see the Trump administration pursue recap and release.

“My comments were never that there should be recap and release,” Mnuchin said. “For long periods of time, Fannie and Freddie were well run and did not create risk to the government. I believe there are very important entities.”

That doesn’t mean that Fannie and Freddie should be left to their own devices, Mnuchin said.

But Mnuchin also said that the status quo of the housing finance system is unsustainable.

“We need housing reform,” Mnuchin said. “We shouldn’t leave Fannie and Freddie alone for the next four or eight years without reform.”

While Mnuchin did not provide specifics for how the Trump administration will seek housing finance reform, Mnuchin said he plans to do it with involvement from both parties.

“It is my objective to find a bipartisan solution to housing finance reform,” Mnuchin said.

Mnuchin was later asked to elaborate on his views on the future of Fannie and Freddie by Sen. Mike Crapo, R-Idaho, who himself is another proponent of housing finance reform.

“Do we need housing finance reform that goes further than recap and release?,” Crapo asked Mnuchin.

“I’m not a Medicare expert but on Fannie and Freddie, I think I am an expert,” Mnuchin said.

“Housing finance reform would be one of my priorities,” he continued. “We need a solution. “The status quo is not acceptable.”

Mnuchin said that he plans to seek a solution “where we don’t put the taxpayers at risk and we don’t eliminate capital for the housing market,” adding that he is “optimistic we can find a bipartisan solution.”

Senate Confirms Jeff Sessions as US Attorney General

Senate Confirms Steven Mnuchin as Secretary of Treasury

Gary Cohn on Trump’s economic agenda

Gary Cohn, National Economic Council director and former Goldman Sachs COO, discusses the Trump administration’s views on the U.S economy, over regulation and more.

CNBC Transcript: White House National Economic Council Director Gary Cohn Speaks with CNBC’s “Squawk on the Street” Today



Chuck Cooper withdraws from Solicitor General consideration

Smart move Chuck! The Stage is Set for Final Victory!

Follow Tim Howard at: https://howardonmortgagefinance.com 

Recently filed Motion in Appeals Court

New filing in the Perry Case, click here to view. (Fairholme’s unopposed motion)

2nd filing in the Perry Case, click here to view. (Fairholme’s reply)

3rd filing in the Perry Case, click here to view.

4th filing in the Perry Case, click here to view.

Recently unsealed evidence from the Writ of Mandamus

Grant Thornton Valuation and Calculation Methodologies U.S. Treasury Department Preferred Stock Purchase Agreements Fiscal Year 2012


Methodology Memo – Warrants, SPS, and Liquidity Commitment

Joshua Rosner Twitter Post

Freddie Mac Earnings Surprise: FAS 133 And What It Means

Court of Appeals agrees to rehear CFPB case, agency to fight “unconstitutional” ruling

Fannie Mae former CFO, Tim Howard Answers Two Important Questions


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Follow Tim Howard at: https://howardonmortgagefinance.com

Question to Fannie Mae former CFO, Tim Howard, What are your thoughts regarding Moody’s claims?


Tim Howard responses:

Many opponents of Fannie and Freddie have been saying for the past few years that it’s not possible for Fannie and Freddie to be brought out of conservatorship without their having to hold so much capital they would not be able to function effectively. It looks like the author of the Moody’s study found a few of those people.

When Fannie was forced into conservatorship in September 2008, it had a $3.1 trillion book of business and $47 billion in capital. Even with all the toxic mortgages it talked itself into buying in a foolish attempt to win share back from the private-label securities market–including loans like interest-only ARMs and no-doc mortgages that can no longer be made today–it still did not lose money on an operating basis between 2008 and 2011. Technically, its meager $47 billion in capital would have been enough for the risks it took. Today, Fannie’s book of business is still $3.1 trillion (unrounded, it’s 2.3 percent larger than it was pre-conservatorship), and the credit quality of its loans is much higher than it was then. In addition, its mortgage portfolio today is one-third the size. So–where does this need for “hundreds of billions of dollars” in capital come from, per the Moody’s report?

The people who don’t want Fannie and Freddie to exit conservatorship can and do come up with all sorts of invented obstacles that seemingly make it impossible. But let’s turn it around and say, “we’ve determined that the Fannie and Freddie business model is the best alternative for the U.S. secondary mortgage market going forward; so, how do we reform them, bring them out of conservatorship, and recapitalize them?” I believe that’s a question that will be asked in the negotiations between the Mnuchin Treasury and the plaintiffs in the lawsuits, and I believe they’ll come up with a much more workable alternative than the author of the Moody’s report did. I’ll give my own thoughts on this topic in my next post, which I intend to put up on Monday.

Original Response

What do you think of this new ridiculous bill on GSE risk sharing from Rep Ed Royce today: http://www.housingwire.com/ext/resources/files/Editorial/Documents/royce_moore_credit_risk_transfer_gse_bill.pdf

Tim Howard responses:

This bill is a great reminder of why it’s such a good thing that Treasury Secretary-designate Mnuchin has promised to “get Fannie and Freddie out of government ownership…reasonably fast.” The only way he can do that is administratively, and that means moving responsibility for mortgage reform away from the legislature in Washington DC–where, as the Royce bill so clearly illustrates, people have no idea what they’re doing– up to the financial professionals in New York, where they do.

Royce wants to make credit risk sharing mandatory for Fannie and Freddie, whether it is economically sensible or not. His bill has no provisions for measuring the effectiveness, or the equity capital equivalency, of the risk sharing he wants to force the companies to do; apparently it’s not important if Fannie and Freddie’s risk-sharing securities actually transfer any credit risk away from the companies, as long as they have the appearance of doing so. (And while we’re giving money away, let’s get the private mortgage insurance industry in on this as well.)

I’d love to be asked to testify about this bill, if it ever gets that far.

Original Response

See below links for more information:

Glen Bradford at SA

Housing and the Trump administration – CNBC Video

In Closing, We believe President Elect Trump and Nominated Treasury Secretary, Mnuchin will correct the wrong caused by the Obama’s Administration.  Bob Corker, Ed Royce and others better get on board with the Trump’s program.

Fast facts on Trump’s key economic team. It looks like Jeb Hensarling see the light and might be on board with the program.

Trump Makes Fannie Mae And Freddie Mac Shareholders Great Again

Trump Makes Fannie Mae And Freddie Mac Shareholders Great Again

Munchin is making Fannie Mae and Freddie Mac shareholders great again. Shares of (Fannie Mae OTCMKTS: FNMA) are currently up 34 percent today, while Freddie Mac shares are clocking in 32 percent gains (OTCMKTS: FMCC)at the time of this writing. And that is not all both stocks are up about 200% since Donald Trump won the election on November 8th 2016. No wonder Bill Ackman and Bruce Berkowitz are so excited about the Trump admin. The two large shareholders expect a revamp of housing policy which could be extremely lucrative to the shareholders. Munchin is very close with Eddie Lampert and is also connected (through that medium?) to Bruce Berkowitz.

But catalyst for today’s rally – Steve Munchin saying on Fox Business Network that the GSEs should not be under Government control. Below is a rough transcript via QTR

Rough Transcription of Mnuchin’s Fox Appearance

Maria: Would you move to have these privatized?

Mnuchin: Absolutely. We gotta get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have. In many cases this displaces private lending in the mortgage markets and we need these entities that will be safe; so let me just be clear we’ll make sure that when they’re restructured they’re absolutely safe and they don’t get taken over again but we gotta get them out of government control.

Maria: This is a big deal. These are huge institutions. You think that. If we saw that as not complicated wouldn’t that have happened already? That it would get out of government?

Mnuchin: Well I think with this administration (Obama) it hasn’t been a priority. If it had been a priority it would have. And in our administration its right up there in the list of the top 10 things that we’re going to get done and we’ll get it done reasonably fast.

Did you notice that Mnuchin used the term “RESTRUCTURED” as opposed to “REFORMED”.