In a letter dated yesterday, a copy of which is attached to this e-mail message, Messrs. Jacobs and Hindes tell the Third Circuit Judge Lamberth is confused about the applicability of Delaware and Virginia corporate law to the GSEs. Fannie and Freddie’s charters specify the terms and conditions for issuing preferred stock (e.g., consideration, conditions precedent, vesting) and declarations of discretionary dividends, but applicable state law dictate the rights, powers, and preferences of the preferred stock itself, including mandatory dividends. And, Messrs. Jacobs and Hindes add, of course Judge Lamberth couldn’t find any case law on this issue; “There is no directly analogous case because the Net Worth Sweep is an absurdity without precedent,” they say. 17-3794-0032
