The Supreme Court will not hear arguments in Collins v. Mnuchin in its current session, but the issue of the constitutionality of the single-director status of the FHFA is still alive. That’s because oral arguments in Seila Law v. CFPB, a case addressing similar issues, are scheduled for early March.
Because it controls the senior class of stock in Fannie and Freddie, the Treasury is in the driver’s seat on recap and release. Former Freddie CEO Layton weighs the government’s options, using AIG as a blueprint.
Judge Sweeney ruled the court did not have jurisdiction on direct claims. But she allowed the Fairholme plaintiffs to continue their derivative claims, which seek remedies for Fannie and Freddie.
Barclays, the largest underwriter of GSE debt bonds, reached a settlement worth $87 million. Separately, a group of 12 financial institutions collectively agreed to pay investors $250 million to settle their claims.
A court ruling last week means plaintiffs can't seek compensation for their direct losses, but can pursue their lawsuits as shareholders representing Fannie Mae and Freddie Mac.
Prosecutors allege that co-owners of a company that offered assistance to borrowers going through short sales illegally charged fees for negotiating the sales.
A District Court judge ordered the Treasury Department to produce all documents attached to subpoenas. He also asked the Treasury to produce a log of any documents withheld based on an assertion of privilege.
Even though the two companies have paid Treasury about $250 billion over seven years, most of that was interest. They may still owe nearly $118 billion in principal.
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