2008-09-09 — wordpress.com
Constitutional Law expert Judge Andrew Napolitano has confirmed that the first of what I would expect to be a flood of lawsuits seeking to block Henry Paulson’s plan to Nationalize the Failed GSE’s Fannie Mae and Freddie Mac.
...
Grounds for the suit,, which I expect to include a request for an immediate injunction preventing any more actions on the part of the Treasury to move forward with Paulson’s plan, are based on theories asserting that the takeover of Fannie and Freddie amounts to the illegal seizure of property (violation of the fourth Amendment) as well as the denial of due process and equal protection under the law (violation of the Fourteenth Amendment).
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Such a crisis could spell the end for lenders teetering on the edge of the abyss- like WAMU, Lehman, Merril, GMAC, National City and a host of other giants who until now may have seemed to be on firmer ground.
The WSJ has commentary here.
But law professors said two federal laws -- one passed in 1992 and another passed earlier this year -- explicitly authorize Mr. Paulson to bring the companies under government control. They said a challenge to the constitutionality of the laws would be a longshot. "That's not a winning claim," said Henry Hu, a professor at the University of Texas Law School.
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