Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Saxton v. Federal Housing Finance Agency

United States Court of Appeals, Eighth Circuit

August 23, 2018

Thomas Saxton; Ida Saxton; Bradley Paynter Plaintiffs - Appellants
v.
Federal Housing Finance Agency, in its capacity as Conservator of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation; Melvin L. Watt, in his official capacity as Director of the Federal Housing Finance Agency; United States Department of the Treasury Defendants - Appellees

          Submitted: May 15, 2018

          Appeal from United States District Court for the Northern District of Iowa - Cedar Rapids

          Before BENTON, KELLY, and STRAS, Circuit Judges.

          KELLY, CIRCUIT JUDGE.

         Three shareholders claim that the federal agency Congress created to serve as conservator of Fannie Mae[1] and Freddie Mac[2] exceeded its powers and acted arbitrarily and capriciously. Four of our sister circuits-the Fifth, [3] Sixth, Seventh, and D.C. Circuits-have already rejected materially identical arguments from other shareholders. Today, we join them.

         I.

         The financial crisis of 2008 prompted Congress to take several actions to fend off economic disaster. One of those measures propped up Fannie Mae and Freddie Mac. Fannie and Freddie, which were founded by Congress back in 1938 and 1970, buy home mortgages from lenders, thereby freeing lenders to make more loans. See generally 12 U.S.C. § 4501. Although established by Congress, Fannie and Freddie operate like private companies: they have shareholders, boards of directors, and executives appointed by those boards. But Fannie and Freddie also have something most private businesses do not: the backing of the United States Treasury.

         In 2008, with the mortgage meltdown at full tilt, Congress enacted the Housing and Economic Recovery Act (HERA or the Act). HERA created the Federal Housing Finance Agency (FHFA), and gave it the power to appoint itself either conservator or receiver of Fannie or Freddie should either company become critically undercapitalized. 12 U.S.C. § 4617(a)(2), (4). The Act includes a provision limiting judicial review: "Except as provided in this section or at the request of the Director, no court may take any action to restrain or affect the exercise of powers or functions of the [FHFA] as a conservator or a receiver." Id. § 4617(f).

         Shortly after the Act's passage, FHFA determined that both Fannie and Freddie were critically undercapitalized and appointed itself conservator. FHFA then entered an agreement with the U.S. Department of the Treasury whereby Treasury would acquire specially-created preferred stock and, in exchange, would make hundreds of billions of dollars in capital available to Fannie and Freddie. The idea was that Fannie and Freddie would exit conservatorship when they reimbursed the Treasury.

         But Fannie and Freddie remain under FHFA's conservatorship today. Since the conservatorship began, FHFA and Treasury have amended their agreement several times. In the most recent amendment, FHFA agreed that, each quarter, Fannie and Freddie would pay to Treasury their entire net worth, minus a small buffer. This so-called "net worth sweep" is the basis of this litigation.

         Three owners of Fannie and Freddie common stock sued FHFA and Treasury, claiming they had exceeded their powers under HERA and acted arbitrarily and capriciously by agreeing to the net worth sweep. The shareholders sought only an injunction setting aside the net worth sweep; they dismissed a claim seeking money damages. Relying on the D.C. Circuit's opinion in Perry Capital LLC v. Mnuchin, 864 F.3d 591 (D.C. Cir. 2017), the district court[4] dismissed the suit.

         II.

         The shareholders argue their claims should have survived dismissal because FHFA and Treasury exceeded their statutory authority under HERA by agreeing to the net worth sweep. We review the dismissal of the shareholders' case de novo. Dunbar v. Wells Fargo Bank, 709 F.3d 1254, 1256 (8th Cir. 2013); ABF Freight Sys., Inc. v. Int'l Bhd. of Teamsters, 645 F.3d 954, 958 (8th Cir. 2011).

         A.

         We begin with the shareholders' request for an injunction against FHFA. Their argument has two parts. First, they assert that HERA's limitation on judicial review does not apply when FHFA exceeds its statutory powers under the Act. Second, they contend that ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.