My Take On The Third Amendment Sweep Litigation
- A clever person can rationalize away anything; and
- Litigation, between parties with sufficient resources, is a war of attrition.
As for Rule 2, the government has stonewalled at every turn, asserting evidentiary privileges to the point of absurdity.
So far as I'm concerned, the pivotal event was Judge Sweeney's decision to authorize discovery. My sense is that once the paper trail to the Third Amendment Sweep is placed into evidence, the absurdity of the government's cover story, made obvious by a tangled web and a whole lot of dirty laundry, will become apparent to Judge Sweeney. And soon, after her ruling against the motion to dismiss, plaintiffs will move for summary judgment. Eventually the incriminating evidence will come into the public domain. And then the DC press corps will smell blood in the water.
Update Monday February 8, 2016: A new story in Inside Mortgage Finance illustrates how litigation is a war of attrition and the government delays the process at every turn.
12 comments - My Take On The Third Amendment Sweep Litigation
Delaware litigation will be over with way before Fairholme, and i can't see how that verdict (assuming positive for Plaintiffs) WON'T affect Fairholme.
Once the Court stops the NWS , what will happen to the SPSA?
Will it be considered paid? Because if the SPSA remains in place
and the GSEs have to pay 18B interest per year there will be no profit ever.
Why all these funds are challenging the NWS but not the SPSA?
As per your book, Tim Howard amicus and even Paulson's book it is
clear that the SPSA is an instrument created to destroy the GSEs.
Even the bastards at the AEI are now suggesting to undo the NWS
and keep in place the SPSA because they have realized that it is more
destructive for the GSEs
Can you give us your opinion please?
If the Third Amendment Sweep is ruled to be illegal under Delaware corporate law or Virginia corporate law, the logic would dictate that the dividends above and beyond the pre-existing 10% rate, would be void. Treasury would be obligated to return the money to the companies and the case in Judge Sweeney's court, or before the D.C. Circuit, would be moot, if the government accepted the rulings on state corporate law.
Under that scenario, the documents under seal in Judge Sweeney's court might never become public, unless other plaintiffs in other courts, who challenge the legality of the initial conservatorship, prevail.
My assumption is that the government will continue to stall going forward. But it may be likely that the Delaware case may be relied upon before Judge Sweeny schedules closing arguments.
The Third Amendment sweep cases do not invalidate the SPSAs. Although I believe the legal case against conservatorship can be made using documents in the public domain, or available through FOIA, I think it's a tougher case to make because taking extreme actions in the middle of a crisis, under the "fog of war" sounds much more plausible to a judge or jury. The plaintiffs are going up against a lot of cognitive dissonance, which affects judges as well as most everyone else.
I'm in no way suggesting that damning evidence won't be uncovered to reveal the illegality of the takeovers, but that would be a longer, harder fought battle.
the bogus claim about making quick decisions in a dire financial environment seem like they could easily be proven false with the forensic accounting, Ugoletti's perjured testimony on the third amendment and MOSTLY the favored terms that the TBTF banks were given at the same time as FnF.
the 10% dividend is an obvious (to the lay person) usury rate based on the terms given to others and the warrants were never intended to be exercised......at least as *I* understand it.
The Third Amendment sweep was patently absurd in its face.
The government takeover of the GSEs had a veneer of plausibility. The case against the takeover may prevail, but the burden of looking back and second-guessing the government's actions in a time of perceived crisis is tougher than the burden of proof for the Third Amendment plaintiffs.
Correction of a typo in prior message. I intended to say: "But it may be likely that the Delaware case may be RULED upon before Judge Sweeny schedules closing arguments."
No argument from me, David, of the relative slam dunk on the Third Amendment. However, my understanding is THAT might be a really, really thin veneer (of plausibility), especially if it can be proven that there were accounting irregularities to try and justify conservatorship AND that discussions of a possible take over of FnF was in the works prior to 2008.
At least for a lay person, such as myself.
Whenever you get into matters involving accounting & finance, it's very easy for one or both parties to muddy the waters, which has the effect of dragging out the process. But I agree, once a rational person goes through all the details of the conservatorship process, the strong preponderance of the evidence woulf show that the government takeover was illegal. Though it may not be an easy story to tell.
Judge Janice Rogers Brown
Born May 11, 1949, she is a federal judge on the United States Court of Appeals for the District of Columbia Circuit. She previously was an Associate Justice of the California Supreme Court, holding that post from May 2, 1996, until her appointment to the D.C. Circuit.
President George W. Bush nominated her to her current position in 2003. However, her nomination was stalled in the U.S. Senate for almost two years because of Democratic opposition. She began serving as a Federal Appellate Court Judge on June 8, 2005.
Judge Douglas Howard Ginsburg
Born May 25, 1946 he is a judge on the United States Court of Appeals for the District of Columbia Circuit. He was appointed to this court at age forty in October 1986 by President Ronald Reagan, and served as its chief judge from July 2001 until February 2008. Ginsburg was nominated by Reagan to fill a U.S. Supreme Court vacancy in October 1987, but soon withdrew from consideration after his earlier marijuana use created a controversy.
Ginsburg took senior status at age 65 in October 2011, and joined the faculty of New York University School of Law in January 2012. He is the author of numerous scholarly works on antitrust and constitutional law. He is not related to Associate Justice of the Supreme Court Ruth Bader Ginsburg.
Judge Patricia Ann Millett
Born September 1963, she is a judge of the United States Court of Appeals for the District of Columbia Circuit. She formerly headed the Supreme Court practice at the law firm Akin Gump Strauss Hauer & Feld. Millett also was a longtime former assistant to the United States Solicitor General and served as an occasional blogger for SCOTUSblog. At the time of her confirmation to the D.C. Circuit, she had argued 32 cases before the United States Supreme Court. In February 2016 The New York Times identified her as a potential nominee to replace Justice Antonin Scalia.
Millett’s 2013 nomination to the D.C. Circuit, along with the nominations of Robert L. Wilkins and Nina Pillard, ultimately became central to the debate over the use of the filibuster in the United States Senate, leading to the use of the nuclear option to bring it to the floor for a vote.
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