The D.C. Circuit Just Told Shareholders to Answer FHFA's En Banc Petition by October 1. Here Is What That Does and Doesn't Mean.

If you're new here: I'm Glen Bradford. I'm long Fannie Mae and Freddie Mac junior preferred shares and have written the full Fanniegate thesis for years. On July 24 the D.C. Circuit unanimously affirmed the $812 million judgment against FHFA, Fannie, and Freddie over the Net Worth Sweep">Net Worth Sweep. On September 8 the government asked the full court to rehear it. In that post I wrote that "an order directing the class to respond would mean at least one judge is interested; that is the only early signal. Silence followed by a one-line denial is the modal outcome." We did not get the modal outcome. On September 16 the court ordered a response. This is a short post about a one-page order, because a one-page order is easy to over-read in both directions.

What the order says

The whole thing is one paragraph. The PDF is here. It is Document #2193258 in No. 25-5113 (consolidated with 25-5121, 25-5154, and 25-5155), filed September 16, 2026, signed by a deputy clerk "for the court." No judges are named, which is normal for this kind of order. The operative text:

"ORDERED, on the court's own motion, that within 15 days of the date of this order, plaintiffs-appellees file a response to the petition for rehearing en banc. The response may not exceed 3,900 words. Absent an order of the en banc court, a reply to the response will not be accepted for filing."

Three details worth noticing.

"On the court's own motion." Nobody asked for this. Shareholders were not permitted to respond on their own; Rule 40(d)(4) says "unless the court so requests, no response to the petition is permitted." The court decided it wanted one.

"The petition for rehearing en banc." The government filed a combined petition for panel rehearing or rehearing en banc. The order mentions only the en banc half. I wouldn't read much into that. The D.C. Circuit's own Rule 40(d) says "a petition for panel rehearing will not be acted upon until action is ready to be taken on any timely petition for rehearing en banc." The en banc request drives the schedule either way. What it does tell you is that the audience for the response is the full court, not just the three judges who already ruled.

"A response." Singular. There are two sets of plaintiffs here, the class and the Berkley plaintiffs. The order does not say whether each gets 3,900 words or they share them. I'd expect counsel to coordinate and I'd expect them to use every word.

What the rules say this step means

I want to be careful here, because this is where people will get excited or scared for no reason.

Two rules, quoted exactly:

• Federal Rule 40(d)(4): "Unless the court so requests, no response to the petition is permitted. Ordinarily, the petition will not be granted without such a request."
• D.C. Circuit Rule 40(d): "A petition for rehearing ordinarily will not be granted, nor will an opinion or judgment be modified in any significant respect in response to a petition for rehearing, in the absence of a request by the court for a response to the petition."

Put those together and the logic is one-directional. If the court were ever going to grant this petition, or even tweak the opinion in response to it, it would ask for a response first. So a response order is on the path to every grant. But it is also on the path to many denials, including denials that come with a separate statement from a judge who wanted the case reheard and lost the vote. The order tells you the petition was not dead on arrival. It does not tell you it is alive.

How the vote works, from Rule 40(c): "a majority of the circuit judges who are in regular active service and who are not disqualified may order that an appeal or other proceeding be reheard en banc. Unless a judge calls for a vote, a vote need not be taken." The same rule says en banc rehearing "is not favored." Judge Walker and Judge Childs, two of the three judges on the unanimous panel, are active judges and vote. Judge Ginsburg, who wrote the opinion, is a senior judge and does not vote on whether to rehear, though under 28 U.S.C. § 46(c) a senior judge who sat on the panel can sit on the en banc court if rehearing is granted.

My honest read: this moves my odds a little, not a lot. On September 9 I put an en banc grant at "well under one in five." A response order means the zero-interest scenario is off the board, so I'd nudge that number up, and I would still keep it under one in five. The reasons I gave then have not changed. The panel was unanimous and ideologically mixed. There is no dissent to rally around. The Jacobs split has existed since 2018. And the petition's best new argument, the N.S. v. Dixon framing, is the kind of thing a careful judge would want answered on paper before voting no. That last point is, I think, the most likely explanation for this order: not "we're going to grant," but "this is an $812 million judgment against a federal conservator, the petition raises a real legal question, and we are going to have both sides in the file before we dispose of it."

I could be wrong. I was wrong about September 8. I'm telling you how I weight it, not what will happen.

What I expect the response to say

This is my expectation, not inside knowledge. The response has 3,900 words and I think the material is already in the record:

• The panel already answered the Collins argument. The opinion addressed it at length and held that the reasonableness Collins discussed was statutory, under HERA, while the reasonableness the jury decided was contractual. Collins was an APA case that never reached the contract claims.
• The government did not challenge the facts. The opinion records that "the FHFA does not challenge the sufficiency of the evidence with respect to the parties' reasonable expectations," and the petition dropped every factual fight. En banc courts exist to settle law, and the response will say the law here was settled by Perry in 2017 and applied faithfully.
• The circuit split is old and narrow. The Third Circuit flagged its disagreement with Perry in 2018. Nothing about it is new, and a damages award that neither undoes the Sweep nor blocks another one is a thin basis for saying a court has "restrained or affected" the conservator.
• No reply. Whatever the response says, the government does not get to answer it unless the en banc court orders otherwise. That matters more than it sounds. The last thing the judges read before they vote will be the shareholders' brief.

The revised calendar

Same mechanics as the September 9 table, with the new step added. Dates after October 1 are my estimates; there is no deadline for the court to rule.

The meter keeps running the whole time. Post-judgment interest accrues at 5.01% on a balance around $915 million, which is about $125,000 a day. The few extra weeks this order adds cost the companies a few million dollars more. As I said last time, they are not paying to keep the money. They are paying to keep the argument.

What to watch next

• October 1. The response itself. I'll read it and post what's in it.
• The order on the petition. A plain denial is the most likely outcome. A denial with a statement from one or more judges would tell you who was interested and would be a roadmap for a cert petition. A grant would be a genuine setback on timing, and I'll say so plainly if it happens.
• Everything else is unchanged. The Q3 10-Qs in late October, Lamberth's docket, and EDGAR for a letter agreement amending the PSPA. None of those wait on this.

Disclosure

Long the junior preferred, same as I've been for years. I trimmed two Freddie series in early September for reasons unrelated to the case. This order doesn't change what I own or why.

I hold long positions in Fannie Mae and Freddie Mac junior preferred shares. This post is my personal opinion and is not financial advice, and I am not a lawyer. Quotations are from the September 16 order, the petition, the July 24 opinion, and the rules linked where cited; the odds, the estimated dates, and the guess at what the response will argue are mine. Do your own research. The full thesis is at glenbradford.com/fanniegate.