With the caveat that we do not provide a legal opinion, we read today’s Fifth Circuit decision as clearing the way open for FHFA to do whatever it thinks advisable now and under any new director to issue rules, redesign the conservatorship, and otherwise supervise and regulate Fannie Mae and Freddie Mac.  While the court clearly sided with the shareholder plaintiffs on constitutional grounds with regards to FHFA’s single-director status, it firmly rejected this as a rationale also for overturning the net-worth sweep.  It also emphasized that all of FHFA’s other powers remain regardless of the organization’s unconstitutionality.

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