IMPORTANT DECISION FROM U.S. COURT OF APPEALS FOR FIFTH CIRCUIT - NET WORTH SWEEP UNLAWFUL

http://www.ca5.uscourts.gov/opinions/pub/17/17-20364-CV2.pdf

In a rebuke to the Obama Administration's unlawful taking of the assets of GSE stockholders to use as a slush fund to pay for its deficit spending (i.e., Obamacare), the 5th Circuit opinion addresses the importance of a balance of power between the branches of government and notes the limited powers of administrative agencies. The FHFA, an administrative agency, exceeded its statutory authority in enacting the Net Worth Sweep and preventing the GSEs from retaining earnings. The federal government received a massive windfall as a result. The GSE stockholders, including many pension funds, paid for that windfall. While the court provided only prospective relief (denying speculators in the stock a windfall), it has been a long road to get to this point. Many judges along the way rubber stamped the unlawful acts of the FHFA. Hopefully, this case will bolster renewed attention to the excessive powers exercised by unelected and unaccountable bureaucrats in the federal government. In the meantime, let's hope the GSEs recapitalize and are allowed to perform a stabilizing function in the housing market.