Supreme Court says Fannie Mae does not have automatic right to federal court News
Supreme Court says Fannie Mae does not have automatic right to federal court

The US Supreme Court [official website] ruled Wednesday that Fannie Mae’s sue-and-be-sued clause does not grant [opinion, PDF] federal courts jurisdiction over all cases involving Fannie Mae [official website]. The case was centered around the interpretation of 12 USC § 1723a(a) [text]. Under the statute, Fannie Mae has the power “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” The Supreme Court focused on the qualification “any court of competent jurisdiction,” or “a court with the power to adjudicate the case before it.” The court found that “in authorizing Fannie Mae to sue and be sued ‘in any court of competent jurisdiction, State or Federal,’ it permits suit in any state or federal court already endowed with subject-matter jurisdiction over the suit.” While Fannie Mae still has a path to federal courts, it will no longer have an automatic pathway.

The effects of the 2008 financial crisis are still reverberating through the legal system [JURIST backgrounder]. Last spring a federal judge unsealed an opinion [JURIST report] from late March ruling that the government did not have grounds to designate the major insurance company, Metlife, as “too big to fail,” a designation only four firms have received. The Financial Stability Oversight Council (FSOC) [official website] determined in 2014 that financial distress at Metlife could significantly affect the national economy and therefore the company deserves increased federal scrutiny. The judge held, however, that such a designation was unsupported by substantial evidence and disregards the costs that Metlife will inevitably suffer. In February of last year Morgan Stanley [corporate website] agreed to pay about $3.2 billion to settle charges [settlement agreement, PDF] that it misled investors in residential mortgage-backed securities [JURIST report]. In September the US Department of Justice [official website] unveiled a new policy [text, PDF] for white-collar crimes, which targets individuals accused of crimes instead of the companies [JURIST report].

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