Federalist Society debates citizenship; Fannie Mae investors wait for Trump

High above Philadelphia at the Pyramid Club, the local lawyers’ chapter of the Federalist Society, the national group best known as the farm league for Republican federal judges and legal appointments (over half the current Supreme Court have been members), will meet Monday June 24 (corrected) to review whether people born in the United States should qualify to be citizens.

If you thought the 14th Amendment, passed to ensure that freed slaves were treated as citizens, settled that question for immigrants, too, the Federalists are digging it up, and inviting a couple of what the chapter calls “America’s best legal thinkers” from two California law schools to argue about it.

President Donald Trump has said he may try to end the practice, which has withstood court challenges.

As part of their campaigns to boost conservative interpretations of the Constitution, the Federalists have a reputation for pitting conservative scholars against thoughtful liberals in this kind of public debate. But this particular setup ($25 at the door for nonmembers) looks more like dueling conservatives.

Against birthright citizenship for people born here will be John Eastman, law professor and onetime dean of Chapman University School of Law in Orange, Calif. A graduate of the University of Chicago law school and veteran of the Chicago corporate law firm Kirkland & Ellis and the Reagan administration, Eastman is a top officer of the Federalist Society and chairman of the National Organization for Marriage, which opposes same-sex marriage.

Favoring birthright citizenship is John Yoo, law professor at University of California, Berkeley, School of Law, who was born in Korea, graduated from Episcopal Academy, and (after Harvard and Yale Law) went on notoriously to justify waterboarding and the state torture of prisoners of war.

He also defended the president’s warrantless wiretapping program and war-making powers as a Justice Department attorney under President George W. Bush.

For more information or to preregister, check https://fedsoc.org/events/debate-birthright-citizenship-a-right-or-a-wrong

Investor Gary Hindes, the Greenville, Del.- and New York-based head of the Delaware Bay Co. who’s made a career of suing government agencies for bungling takeovers of financial companies, is hoping for profit and bracing for propaganda as the Trump administration considers doing what President Barack Obama never accomplished: ending the federal government’s takeover of housing-finance giants Fannie Mae and Freddie Mac and returning them to private control — with or without the same implicit guarantee that Congress will bail them out if they ever run out of money.

Hindes is among investors suing the government, alleging that the Treasury Department under Obama and Bush seized many billions in Fannie and Freddie profits that should have stayed with investors.

He sent a primer to reporters last week to challenge past Treasury and administration claims that Fannie and Freddie were insolvent and needed a “taxpayer bailout when they were seized and placed into conservatorship by the government in September of 2008.”

Hindes says documents made public in shareholder lawsuits like his have at the least “raised serious doubts” that the government needed to seize the housing-finance giants. Fannie and Freddie ended up recovering many billions from Bank of America and other mortgage lenders that lied about the rotten condition of many of the loans they sold to the housing agencies. Those misrepresentations helped spark the 2008 financial meltdown and the Great Recession.

So to Hindes, the government’s action to take control of Fannie and Freddie “wasn’t a bailout, it was a stickup," in which a well-financed institution was diverted to producing cash for the government instead of its owners.

Of course there are broader questions, besides shareholder payouts, riding on the Trump administration’s solutions:

Will Treasury be forced to return to shareholders the money it took from Fannie and Freddie?

Will a privately run but government-supported housing finance system continue to deliver cheap, fixed-rate 30-year mortgages?

Or will private mortgage bankers get their wish and see Fannie and Freddie fully privatized, with no government guarantees, giving banks more power to fund and price loans as they see fit? That would likely make mortgages more profitable for them — and more expensive.