| |
1. Supreme Court Finds FHFA Structure Unconstitutional; Biden to Remove Director Calabria
The Supreme Court on Wednesday ruled that the structure of the agency that oversees Fannie Mae and Freddie Mac violates separation of powers principles in the Constitution. In a split decision, the court found that the leadership structure of the FHFA was unconstitutional because of a provision that the president could only remove its director for cause, not at will. The widely anticipated decision mirrored the court's ruling on the similarly structured Consumer Financial Protection Bureau last year. The court also unanimously dismissed a claim by Fannie and Freddie shareholders who sued the government to invalidate the 2012 decision to send the companies' profits directly to Treasury, the so-called "third amendment," stating: "We conclude only that under the terms of the Recovery Act, the FHFA did not exceed its authority as a conservator, and therefore the anti-injunction clause bars the shareholders' statutory claim." - Why it matters: The FHFA was created in 2008 in the wake of the financial crisis as part of the Housing and Economic Recovery Act, and the FHFA quickly thereafter placed Fannie and Freddie into conservatorship. The case before the Supreme Court was brought by Fannie Mae and Freddie Mac shareholders who argued that the regulator overstepped its authority when it reached an agreement with the Treasury Department to sweep the mortgage giants' profits to the federal government.
- What's next: The ruling paved the way for the Biden administration to fire FHFA Director Mark Calabria at will, and President Joe Biden took swift action. In a statement yesterday, a White House official told the press that Biden planned to replace Calabria: "FHFA has an important mission of oversight of Fannie Mae and Freddie Mac as well as the Federal Home Loan Bank System," the White House official said. "It is critical that the agency implement the Administration's housing policies. As a result, in light of the Supreme Court's decision today, the President is moving forward today to replace the current Director with an appointee who reflects the Administration's values." President Biden named Sandra Thompson, current FHFA Deputy Director of the Division of Housing Mission and Goals, as Acting Director. MBA's statement on Sandra Thompson's appointment can be found here.
2. Treasury Secretary Testifies on Capitol Hill; Discusses Retroactive Capital Gains Proposal On Wednesday of last week, Treasury Secretary Janet Yellen suggested in remarks before a Senate panel that if Congress were to pass a capital-gains tax hike starting in April 2021, that would not count as a retroactive increase. "I don't see a prospective change in rules pertaining to the taxation of future realization of capital gains as being a retroactive feature," Secretary Yellen told the Senate Finance Committee, when asked about the Biden administration's tax proposal. A summary of the full hearing can be found here. - Why it matters: President Joe Biden's proposal to raise the capital-gains tax rate to 39.6% from 20% for those earning $1 million or more was first announced April 28, as part of the administration's American Families Plan. Secretary Yellen's comment suggests that the White House continues to push for capital-gains increases to be effective before the date Congress passes any potential law.
- What's next: President Biden's proposal to tax capital-gains income at the same rates as wages and salaries for high earners would be one of the biggest changes to investment taxation in roughly a century. Debate over the start date of any capital-gains tax changes is likely to be a source of tension as the issue is debated in Congress during the coming months.
3. House of Representatives Introduces Remote Online Notarization Legislation Last Wednesday, Representatives Madeleine Dean (D-PA) and Kelly Armstrong (R-ND) introduced H.R. 3962, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2021, which would create a federal standard for Remote Online Notarization (RON) transactions. Like the companion legislation in the Senate (S. 1625), the SECURE Notarization Act of 2021 requires tamper-evident technology in electronic notarizations and provides fraud prevention through the use of multifactor authentication for identity proofing and audiovisual recording of the notarial act. The legislation would complement existing state laws, while providing states the flexibility and freedom to implement their own RON standards. More than 1,900 MAA members have already sent over 2,700 messages to their Representatives urging them to support this legislation. Click here to add your voice on this critical issue. - Why it matters: A direct result of MBA's advocacy, the bills' minimum standards for RON are consistent with those provided in the MBA-ALTA model state RON bill and the Mortgage Industry Standards Maintenance Organization (MISMO) RON Standards.
- What's next: MBA will continue its educational and advocacy campaign in tandem with coalition partners to move the bill through the legislative process.
|
|
