Friday, December 19, 2014

The law of title 12 should scare every BANK!!

The department of justice is saying under this statute that the FHFA can transfer the assets of fannie mae and freddie mac to the US treasury.

12 U.S. Code § 4617 - Authority over critically undercapitalized regulated entities
(G) Transfer or sale of assets and liabilities
The Agency may, as conservator or receiver, transfer or sell any asset or liability of the regulated entity in default, and may do so without any approval, assignment, or consent with respect to such transfer or sale.

That is the power FHFA is saying allows it to send the profits to anyone it chooses, US treasury in this case. But they are making the case they could have sent it to Mel Watts sister if he wanted to. All $32 billion a year, to his sister. And not a court could stop it!
What should worry banks is this:
12 U.S. Code § 1821- Insurance Funds
(G) Merger; transfer of assets and liabilities
(i) In general The Corporation may, as conservator or receiver—
(I) merge the insured depository institution with another insured depository institution; or
(II) subject to clause (ii), transfer any asset or liability of the institution in default (including assets and liabilities associated with any trust business) without any approval, assignment, or consent with respect to such transfer.
This his what regulates the FDIC and banks that are taken into conservatorship or receivership. Using the department of justice argument the FDIC can give all of a banks profit or money or building for that matter to anyone it wants including the US treasury!
So if you want the Government to win the court case and your a bank, Know that it is setting up precedent for your bank to be taken over in the same manner as Fannie mae.
Its in the law and if you simply read the statute as the DOJ has convinced the court to do, you will be next!! 

clause (ii) does not save your bank!!
(ii) Approval by appropriate Federal banking agency No transfer described in clause (i)(II) may be made to another depository institution (other than a new depository institution or a bridge depository institution established pursuant to subsection (m) or (n) of this section) without the approval of the appropriate Federal banking agency for such institution.

clause (ii) only protects you from your assets being sent to another bank, Not the sister of the FDIC regulator!

GSE or bank is in default if a conservator or receiver has been appointed!

12 CFR 1237.2 - Definitions.

(1) Default means, with respect to a regulated entity, any official determination by the Director, pursuant to which a conservator or receiver is appointed for a regulated entity. 

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