Posted on June 16, 2017
Messrs. Jacobs and Hindes filed their brief opposing FHFA, Fannie Mae and Treasury’s motions to dismiss this afternoon. Messrs. Jacobs and Hindes tell Judge Sleet that, contrary to FHFA, Fannie Mae and Trasury’s positions, there is no federal corporate law relevant to this case. Corporate law is a function of state law — Delaware corporate law in this case, because Fannie Mae elected to follow it — because there is no such thing as federal corporate law. The Net Worth Sweep is both absurd and illegal, Messrs. Jacobs and Hindes tell Judge Sleet, because no state allows a corporation to contract away all of its net worth in perpetuity. The Third Amendment was invalid when it was executed and should be judicially voided today. And because FHFA and Treasury entered into an illegal agreement, HERA doesn’t insulate them from GSE shareholder litigation. The government’s sovereign immunity and issue preclusion defenses are, well, silly, Messrs. Jacobs and Hindes add in so many words. Messrs. Jacobs and Hindes urge Judge Sleet to deny FHFA, Fannie Mae and Treasury’s motions to dismiss and allow a jury to review the evidence in a trial and, based on that evidence, reach a conclusion about whether the Third Amendment should stand or fall.
A copy of Messrs. Jacobs and Hindes’ brief is attached to this e-mail message and the voluminous exhibits are posted at http://bankrupt.com/misc/15-