persuade you that all three of the circuits let every ject of the same arguments that i'm here to advance to you got it wrong and alone dissenting judge judge brown in the d c circuit got it right but i'm bound to say that the interpretation of hara that my friends represented government have successfully persuaded three circuits is wrong and i'm frank also  not only is it wrong it's not tenable let me begin with the word may that's the fulcrum the word may in forty six seventeen b two d the provision outlining the essential powers of the mission of a conservatory because that provision used the word may not shall the government says that it is entirely discretionary it imposes no obligation on the conservatory at each f a as conservative or to in the words to take action intended in these words from the subsection self to put the regulated entity in a solvent sound and solvent condition and to carry on the business of the regulated entity and to preserve and conserve its assets the conservator may take actions intended to do that or it may not according to the government indeed under their reading if they say there is no such thing as a bad motive motives are irrelevant reasons make no difference difference purpose is irrelevant they can take that action or not for any purpose at all not just the purposes defining the conservators mission in b to d what do we do with the fact that and i understand your argument the make can impose a duty  late it could look like a shower but the problem i have with your argument is the statue uses the word shower one hundred forty two times and here we have the word may and so doesn't the use of the word shall elsewhere undermine your granting power to a conservatory let's look at b to b let's look at b to b the f h a as conservatory i'm a quote take over the assets and operate the regulated entity and it may conduct all business conduct collect all debts and perform all functions of the regulated entity but according to the government discretionary interpretation of may the conservator doesn't even have to do these absolutely essential powers these are essential things and yet the government doesn't have to take over the assets it doesn't have to perform these functions it doesn't even have to collect the de of the regulated entity and the government again says their motivations they had can't have a bad motive their motivations are irrelevant not once in any of these cases in i believe i'm familiar with all has the government offered a single act that if it took it would be called for a virus it would as we say in our a p a case classic standard a p a case it would exceed their like we can ask we have never heard them say that an act that they took as conservatory would be ultraviolet rays and would give a court the authority under the judicial immunity provision to restrain that act in a standard classic a p a case like the one i have brought to you but the result just struck us of their interpretation looking at the word mess is that a mere suggestion and that's implausible on his face when you look at the other places where users may it becomes untenable i would suggest to you but it really boils down to that they have essentially argued that it is not possible for them to act out for valerie's which in the face of their concession that if they could act or receive to allow judges to restrain their actions it means that basically the range of possible actions for a litigant to bring to a court is a no set so so if they would concede that there is something outside of the power  something ultra vires then then what does that do to your position on the word may well let's look they've not done that before they've not done that before and you know what if what if we concluded that that were the case would do how does that affect your argument as to the use of their word may in this particular provision where they say may is permissive discretionary non binding a suggestion in be too deep what what what would their argument be that the word man in these other places is somehow not just a suggestion but is a you may do this and you may not do something else which is our our submission it's that this isn't a suggestion the actions that it authorizes b two d have to be directed towards these defining purposes which this court in cedar mn said are the defining mission the defining purposes of conservators as long as there has been regulation of financial institutions by the federal government their argument renders the judicial review provision completely superfluous it's a no set again there's nothing i could bring you challenging their ox as a conservative or under their interpretation and then the interpretation that has been accepted by the d c circuit to others that if you read their opinions this is what they're saying counsel part of your theory is that and i think this was the theory of judge brown in the in the d c circuit case is that the common law definition and the duties inherent in a conservator are  incorporated in the statute but one of the questions i have is the statute as as you know it is extremely broad i mean that's really the thrust of your argument overly broad and so one of the unique aspects of the statute is is it allows the agency to act in its own interests or in the interests of fannie or freddie and i'm wondering whether that undermines your common law argument because i don't know of any conservator relationship where the conservat act in the conservators best interest when that doesn't align with the ward's best interests your honor we have maintained as this court said in cedar that a conservatory in the common law and in all federal statutes always its defining mission is to operate the business carried on conserve and preserve the assets try to rehabilitate it as a two says in this statute i also said that the conservatory or receiver could act in the interests of the institution or their it said depositors because it was dealing  depository institutions may have completely different interests to the stockholders or the conservators of the agency as conservatory this is not new in federal regulation the question becomes provision what it says is the conservator quote may take any action authorized by this action which the agency determines in the best interest of the regulated entity or the agency so yes they can take actions which they believe to be in their best interest but they only the actions authorized in this action let's go back to see what is authorized in the section what is authorize defines what those actions must be directed to even though be enacted by congress subsection b s in title powers and duties as conservator or receiver no your honor i got to subsection i'm looking at the law plain be just when you look at b before you go into any subsection oh yes your honor and yeah and then and then it it and then to has general powers yes so now when it says back here any action also section i think it takes t whole means a whole section not just part of the section well that's fair enough you're ok got the whole section but what is it that this section tells us specifically about a conservator what powers what actions that it may take it may take such actions quote as may be necessary to put it in such a sound in solving condition in other words its actions are defined by a purpose a reason it can't take an action that is it we would submit to you that is motivated by a desire to do something else especially to do something in him a call to those purposes which we submit to you that well pled allegations of our complaint make out that they do mix conservator realtor stuff your honor this is where i said the wrong word but well i think i understand powers those actions are actions that generally either one can take but when you come specifically to the succeeding second subsections unless they are really to have no independent meaning and the f h a can do whatever it wishes either and put on a conservator receivership hat that is swim without actually declaring a receivership and doing what  point that the the agency's going to be limited by the powers granted by congress in the statute but i get back to the common law duties i can't figure out where those come in and and i understand that the d c circuit dissent found that differently but with this being not a typical conservator ward relationship i'm trying to figure out what the balance of our of us are we were viewing to see whether or not the statute was followed or are we are so you're not making the common law argument that ok i'm sorry i didn't follow your question just draw us i'm not here arguing that the common law somehow i don't know trumps the statute i'm arguing just look at the four corners of statute i am saying that as you look at it you should for deeper into my rebuttal time i am bound to say so that my friends will have a chance to answer a point about the succession clause that's the alternative argument the succession cosby to say which says that the conservatory or or receiver immediately succeeds to all rights of any stockholder respect to the companies or their assets the district court will add as an alternative ground and they've advanced that we lack prudential standing because our cause of action has essentially gone as stockholders as going to the conservatory and this is wrong both as a matter of and state law i don't have time to trudge through the tuli factors and all the state law stuff here but i do want to leave you with this key point we have brought a classic prudential standing and the loss of our entire investment clearly places within the zone of interest that hara was designed to protect but here's my key point the judicial review provision itself subsection f confirms this it confirms our view that congress itself understood that stockholders would have a direct cause of action under the a standard plastic claim just somewhat like the one i'm here to provide to you so congress surely understood this that such claims must be direct because it obviously didn't intend it couldn't have intended that a claim to restrain the conservatories access alter virus could only be brought by the conservator itself suing it's that that that kind of intent can't be attributed to congress because it's preposterous  as they were before judge press in iowa in december two thousand and fourteen and i mention that only because in addition to the three courts of appeals that have agreed with our position we also have judge pr court in the in iowa we have the court in college in texas and we have the jacobs court in delaware announced all right now you've got to confront cedar met what do you do with page fourteen fifty four of the superman opinion where we go to great lengths to distinguish a conservator job from a receiver shot for and it's under the predecessor statute that congress copied and perhaps you're indicating this th often correctly that was structured on based on was not yet in effect that conservatorship was under whatever existed before well that's a nice irian sure but that's not what this court says even if i would say there is conservatorship and receivership proposed by ria that case did not involve any of the issues we have in this case the sitter in case did not involve that case helped us because it treated the conservator in the receiver for most purposes as having the same authorities and that is the fact except for the power of liquidation and your honor stress that uses the statues uses the word shall it says if a receiver is appointed the receiver shall liquidate no choice but in many other contexts such as the context we believe  dispositive here the word may is used but just what i want to i want to step back for a second and ask you a question i just want to understand exactly what that third amendment ted when you look at that third amendment one of the conclusions i reached is that is that that agreement effectively nationalized freddie and fannie because there's there's no room for private investors all the access that worth goes to goes to the treasury and i'm wondering am i right about that and if i'm wrong tell me why i'm wrong under the third amendment needs to be viewed in the context of the overall agreement which is not a challenge which was executed between treasury and the f made will get ten percent dividend and will get certain other forms of composition including what was called a periodic commitment fee which was never paid because it had been waived but it could have been potentially of when you had the agreement in the third amendment in two thousand and twelve the only thing that changed from the original agreement in two thousand and eight was that the compensation flows change the what value is left for investors private investors that with a question of honor but the question perhaps assumes that there was a bell you there on the date of the third amendment but i would remember in value in the future i would remind the court that the draws and there were many draws would occur only when the institutions were in solved so by two thousand and twelve the treasury department had put in i remember the numbers correctly one hundred eighty seven billion dollars and that was taxpayer money and on top of the hundred eighty seven billion dollars the treasury committed to infuse approximately just north of another two hundred fifty billion dollars that two hundred fifty billion dollars the treasury remains liable to infuse in times of insolvency today is the reason these institutions are operating the markets view that commitment as capital because the institutions generally have close to zero capital based on the structure on which the running and i would also urge the court to consider private investors could have a chance to make infusions frannie and freddie sought private investment in early to mid to continuing through two thousand and eight and all of those efforts fail or the council's a long winded way of saying it was worth nothing then it's worth nothing not investors so what you're say zero zero didn't change present value zero in the future president is a row then no big deal yes your honor wanted to stay on the legal issues b court will look at that again you had one hundred eighty seven billion dollars of treasury infusions every dollar that before any dollar there could be infuse there would have to be a determination made the time of the infusion the institution was insolvent and that's why the hundred eighty seven billion was infused player say well eventually dividends were achieved and those dividends should have been used to pay down the hundred eighty seven and we would dispute that because there was an agreement and treasury would get compensated for the one hundred eighty seven billion it invested and it would be quarterly dividends could be paid treasury got everything right the private investors didn't didn't get the quarterly dividends after the third amendment today that's correct that was pursuit of the terms of the amendment that right the terms of the agreement the terms of the  treasury from day one through the third amendment agreed to commit a little below a half a trillion dollars and under the statute that authorized treasury make those investments treasury had to do certain things and congress emphasized in the tree and i should also state that treasury's authority is actually stated in the charters of freddie and fannie that's where congress include the authority for treasury to make these investments and when treasury made these investments congress directed you have to do certain things one of those was to protect the taxpayers and treasury and the f h a if a they negotiated they came out with that agreement and all these provisions and i would say specifically the provisions for compensation are intended to protect the taxpayers because in addition to the taxpayer funds that have been infused the fact that the taxpayers are potentially exposed to another two hundred fifty billion dollars if tomorrow  mean i was going to ask you i want to get to the legal questions one of the probably their strongest claim is the claim that that the agency can't be subject to the direction or supervision of treasury and they make the the allegation in the complaint we're dealing with  real quickly is all the statute says is treasury can give money and it gives the f h a if they the authority to agree to take infusions if they negotiate the terms the statute says doesn't require f h a if aides who agree and there's just no basis for these statements that somehow treasury was over somehow misuses power hear that they were not with the plaintiffs here are not within the zone of interests there is statutory support for that but suppose that suppose that the allegations that complain and have to go back and look to see if they actually alleges that the treasury hijacked it the treasury essentially twisted arms maybe there's some sort of quid pro quo something going on there was a little illegitimate and the agency felt bound and compelled to to do it with that provision be violated then well they don't make those allegations in the complaint and you could tell that from the reply brief the re i think sort of embraces the idea that treasury must have had control because otherwise how do we end up where we are rather than any kind of specific allegation about anything concrete in terms of what treasury or f i f a did or their agreement so i would say i don't think we have that they are bringing a p a claims i just think some of their more inflammatory rhetoric is really about expropriation and claims that go to the taking so that they have brought in the court of federal claims in addition they the conservatorship i indefinite in term and it's been going on for quite some time now we acknowledge that but there may be value at the end of the day for these investors that they hold stock the stocks are trading how would that how would that occur if all that all the excess value goes to to the treasury i mean what would the third amendment have to be modified for there to be any value or could you actually could you give me a scenario where there could be value under the third amendment i think there would need to be a modification of the third member or into receivership or some other congress could propose some other path forward and i think you're right on the facts of what the third amendment does and to be clear the third amendment shifted the risk so it's true that treasury in some quarters has gained more in some quarters is paid no dividend for example in the last case have decided that it was acting within its conservator what could be altered virus they said the way you do it there's no it's not possible and that's not true i mean the thing that you give us an example or so that the enterprises have a charter that charter does not permit them to originate loans might also clarified force but i think if we look to what we're what the plaintiffs are saying here they don't like the terms of the firm and that they think it was a bad business deal every court to consider it in this context and in the context has made very clear that your disagreement your second guessing of a business judgment simply is not an alter of your action and does not give you a means to circumvent forty six is there ever a situation where the business judgment is so off base that it becomes essentially equivalent to another words that you're saying that you're trying to preserve and conserve but there's really just absolutely no way that what you are doing meets that goals and therefore i outside the scope of what their authority our position is now as long as there is a business judgment that being made and exercising one of the conservative power conservators powers in here that you wouldn't get a lot of u s action just because you thought the deal was so bad it would really have to be an action that is outside their powers and that the seventh circuit said fundamentally inconsistent with the incompatible with the powers of a conservator and so you never look at the end result of what the judgment because it does seem if you really push it you could just have terrible management and decision making process that really was just you know a bulldozer through the goals and that would still be within this scope of may to go back to that fire case the point of theirs that i am offering them more money i will they will get more money from this deal if they would take my deal let me purchase this building and not sell to someone else and the fifth circuit said no that that even that kind of allegation which was that concrete here we don't have anything that assets what if they bought worthless paper everybody knew it was worthless and and under the management of the agency they bought things that were absolutely worthless still we can't we can't look at that because they're operating exercising one of their powers that is our position now court doesn't need to go that far of course if you have with saying something that broad that what we're dealing with here are the renegotiation of dividend payments managing heavy debt period capital courts that also hard to come by capital at the time of that in two thousand and eight of course there was no one willing to provide the kind of capital that was necessary at that time and treasury stepped in and bought the preferred stock and still have that two hundred fifty four billion dollars commitment out there to keep the enterprises ongoing repudiate contracts again when you became receiver and so the court wanted to make a distinction to sort of show that yes you could make that decision the decision might be different if your conservator or receiver so that's the context in which this court was distinguishing those two thank you would  may means you can only do that which you have been authorized to do you can do a b c but you can do x y z in you certainly can't do the opposite of a b c a judge kelly is your question i think went to just  the third amendment did national as freddie and fannie there's no other way to understand it as as you have suggested let's remember what the treasury's own press release said when they announced the third amendment they said we are taking these actions to ensure that every dollar of earnings would be used for the benefit of taxpayers that's a quote further they said in to ensure that fannie and freddie will not be allowed to retain earnings rebuild capital or return to the market they their purpose which cannot possible be reconciled with b two d is so off base judge kelly their purpose was to hold these entities and permanent conservatorship captivity captivity an order to harvest their profits purely for the government itself it was a it was a classic nationalization it's never been done in this country before if this doesn't go beyond their powers as a conservator then it is certainly true nothing would possibly it beggars the imagination to how you know what might how do we know so so if you talk about you're saying they may do these things so long that certain actions so long as they're within the thory is that is that is what the deciding point is that when it's a complete disaster when they're buying completely worthless security when when does it become how can you describe for me and a couple of years when it becomes outside the authority well i would say your honor if if the conservatory takes actions that are not directed towards putting them in a sound and you know what if they take action that they say well we're try and but they're just really bad decisions and it's and it's a disaster honor we're not here bringing you a close case yes we're then they do have discretion within these broad terms we don't deny that but they can't do something that's antithetical to the to the defining purpose of the of the conservator and and with respect just struck us no value says my friend for the for the government in these shares if there had been no third amendment there'd be a hundred over one hundred twenty billion dollars worth of tangible capital in these entities the private shareholders would have gotten the benefit of that and they would have been on their way to being return to normal business operations thank you for the argument but case number seventeen dash seventeen twenty seven is submitted for decision