About That Odd SG Letter

or, just how much does the Biden Administration want to get rid of Calabria?

On March 18, 2021, acting Solicitor General Elizabeth B. Prelogar sent to SCOTUS a letter, setting forth the government’s position that the Collins case has not been rendered moot by the post-Collins oral argument letter agreement to the PSPA .

The SG is clearly right: nothing in the letter agreement provides Collins Ps the relief they are seeking, so that the Collins case remains live and justiciable by SCOTUS. The Collins Ps want an injunction preventing NWS distributions in the future (without preference accrual for the senior preferred stock), and invalidation of prior NWS dividends to the extent they exceeded the original 10% dividend provision (or recharacterization of this excess amount as a pay down of senior preferred stock principal) (“backward relief”). The PSPA letter agreement does neither, quite obviously so.

What is remarkable about the letter is that it was clearly unsolicited…and therefore rather unusual. The letter does not begin by referring to any inquiry made by SCOTUS to the government regarding the legal effect of the PSPA letter agreement, and framing that this letter is in reply to such inquiry. It would be an absolute form faux pas for the SG to respond as it does, if indeed such an inbound SCOTUS inquiry to it had been made. No such SCOTUS inquiry was docketed in the case file nor set forth as an attachment by the SG to its letter.

Furthermore, the SG requests the SCOTUS clerk to forward the letter to each of the Justices, which would be an absurd request if indeed the letter was a reply to a question that was posed by the Justices.

It is not unusual for a new POTUS administration to review the arguments advanced in still-undecided SCOTUS cases by the previous POTUS administration, and make it known to SCOTUS if it disagrees with the prior administration’s argument…something Chief Justice Roberts is on record as not being enamored with.

But why did the Biden Administration feel the need to point out that the Collins case must still be decided when SCOTUS had expressed no doubt on the matter (and this is rather obvious from a reading of the PSPA letter agreement)?

The most logical explanation is that the Biden Administration (really, really) wants to replace FHFA Director Calabria promptly without cause. Since the Trump administration argued for invalidation of the existing statutory removal for cause provision in Collins, this is not a situation where the new POTUS “flips” the government position expressed in the case by the prior POTUS.

Now for a speculation. By making it clear to SCOTUS that the PSPA letter agreement provided Collins Ps no backward relief, and not making it clear at the same time that the Biden Administration objects to any grant of such backward relief, has the Biden Administration sent an unwitting signal to SCOTUS that such backward relief should not be considered to be a “tough swallow”?