The following exchange is from Tim Howard’s blog:
FEBRUARY 25, 2016 AT 7:58 PM
Fanofred: You may in fact be a lone wolf on this one. I’ve been on corporate boards, and the last thing a board member wants to do is get into a fight with a government regulator. Paulson knew that, which is why somebody–I’m not sure we’ll ever know who–put the clause into HERA you cited above and I’ve cited previously, exempting Fannie’s and Freddie’s board members from shareholder lawsuits if they caved to Paulson’s demands that they consent to conservatorship. I don’t think it would have made a bit of difference if there had been a full board vote or not; either way, they would have consented. (And this is “inside baseball,” but Paulson’s book mentions that when he was pushing Fannie’s executives and board members to give in to conservatorship, they had their legal advisor, Rodgin Cohen of Sullivan & Cromwell, with them. I know Cohen, and he’s as good as they come. He knew there was no way Fannie could fight this.)
FEBRUARY 25, 2016 AT 8:41 PM
Thanks Tim. Yes, according to the official Treasury calendar Rodgin Cohen was in attendance at the meeting with Paulson, Bernanke and Lockhart, but not with a full board of either company. I am sure the gentleman is very smart…
Evidently, we disagree on whether the point is relevant. From my understanding, the Delaware case if based completely on following corporate law.
So, what is different in asking a) is a company allowed to pay in dividend it’s entire net worth to only one class of shareholder vs b) is the government allowed to claim that boards of directors consented (procedurally and legally voted in favor of) a conservatorship which in effect nationalized their companies?
I don’t mind being the lone wolf here. One day the truth will be known.