$FNMA #FANNIEGATE

Perry Capital and Arrowood delivered their petition for a writ of certiorari to the United States Supreme Court yesterday, and a copy of the filing is attached to this e-mail message. Perry and Arrowood look to the High Court to answer one question:

-- Whether 12 U.S.C. sec. 4617(f), which prohibits courts from issuing injunctions that "restrain or affect the exercise of powers or functions of" the Federal Housing Finance Agency ("FHFA") "as a conservator," bars judicial review of an action by FHFA and the Department of Treasury to seize for Treasury the net worth of Fannie Mae and Freddie Mac in perpetuity.

Perry and Arrowood tell the nine justices the answer is no. The GSE shareholders go on to conclude, at p. 33:

"The D.C. Circuit's decision dangerously misconstrues FHFA's conservatorship powers. FHFA's conservatorship provisions are neither new nor alien -- Congress took them verbatim from FIRREA, importing the FDIC's decades of sound experience in resolving troubled financial institutions, and the centuries of common-law conservatorships on which the FDIC relied. Nothing in the text or purpose of HERA, decades of FDIC practice, or centuries of common law even remotely condones the Net Worth Sweep's massive expropriation -- a confiscation that leaves the Companies functionally insolvent, saddled with Treasury's $189 billion liquidation claim, and with no ability to escape a vampiric relationship with the government. Yet the decision below permits any governmental conservator -- including the FDIC -- to confiscate funds under its supervision without judicial review simply because the conservator did so in the course of operating the ward. That's not a conservatorship; that's embezzlement."

Perry and Arrowood urge the Court to grant its petition and review the D.C. Circuit's decision.Perry Capital Certiorari Petition as filed